China invested billions in AI data centers, chasing a tech boom that now seems to be a bust. As demand for computing power dwindles, roughly 80% of these newly built facilities remain unused, and traders are witnessing a significant downturn in GPU rental prices. The initial excitement over AI’s potential has transformed into a struggle for many now-empty data centers, prompting a wave of selling as investors lose faith in the long-term returns of their investments.
The rapid expansion of AI infrastructure was largely driven by inexperienced players in the industry, including government entities and corporations with little to no AI expertise. Many constructed facilities that lack the technical capability to meet today’s demands, and the shift in AI usage from training models to real-time reasoning has rendered numerous projects obsolete. As companies like DeepSeek redefine market expectations, smaller companies and underprepared data centers face the harsh reality of surplus supply against declining demand.
Despite the alarming oversupply, the Chinese government remains committed to developing AI infrastructure as a vital component of the country’s technological future. Major tech companies continue to invest heavily in this sector, underscoring the belief that AI is essential for national progress. The current scenario poses a challenging landscape for data center operators, with many pivoting towards different ventures while uncertain of the future of a market initially thought to herald an era of technological dominance.
