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Microsoft has pulled the plug on its planned $1 billion data center project in Licking County, Ohio. The company had announced in October 2024 plans to build three facilities in New Albany, Heath, and Hebron.
Noelle Walsh, president of Microsoft’s cloud operations, wrote on LinkedIn: “We are slowing or pausing some early-stage projects.” She added, “While demand for our cloud and AI services exceeded expectations, we’re now refining our approach.”
Why Microsoft Backed Out
Several factors drove the decision:
- Cost Increases: Trump administration tariffs (34% on Chinese tech imports, 32% on Taiwan, 25% on South Korean goods) have made data center equipment much more expensive.
- AI Needs Reassessment: The company is reevaluating its computing infrastructure requirements.
- OpenAI Relationship Changes: A January agreement now allows OpenAI to build its own computing capacity rather than relying solely on Microsoft.
- Potential Market Oversupply: Some analysts report that concern about excess computing capacity in the coming years could influence infrastructure investment decisions.
Local Economic Impact
The cancellation hits Licking County hard:
- Loss of 400 annual construction jobs
- Elimination of hundreds of planned full-time positions
- Approximately $150 million yearly local revenue vanishes
According to an analyst on social media platform X, “@AdameMedia”: “Licking County, Ohio will lose roughly 1,000 jobs & $150 million per year in revenue for the local economy.”
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Microsoft’s Broader Pullback
This isn’t isolated. Microsoft has halted or delayed data center projects in:
- Wisconsin (announced December 2024)
- Illinois and North Dakota
- International locations including Indonesia, UK, Australia, and parts of Europe and Asia-Pacific
Remaining Commitments
Microsoft will still:
- Fund promised roadway and utility upgrades
- Allow farming on two of the three sites
- Support local digital skills development programs
Energy Requirements and Solutions
AI computing demands massive electricity. Trump cited these needs when using emergency powers to boost the declining coal industry. Tech companies are exploring nuclear power solutions, including a Microsoft-backed plan to revive Three Mile Island to power data centers in Ohio and Virginia.
Expert Assessment
D.A. Davidson analyst Gil Luria stated: “There’s no doubt that the equipment that goes into data centers will become significantly more expensive.”
Abhishek Singh, partner at research firm Everest Group, noted: “Capital expenditure by tech giants will get reshuffled: Expect major players in AI infrastructure and consumer tech to reallocate short-term spending away from expansion and toward procurement hedging or sourcing shifts.”
Microsoft maintains it will spend over $80 billion globally on AI infrastructure this fiscal year, despite these project cancellations.
