Cheap energy, abundant land, and proximity to Beijing have made Ulanqab, Inner Mongolia, a data center hub, with ~100 data centers built or under construction (Zeyi Yang/Wired)
Cheap energy, abundant land, and proximity to Beijing have turned a city in Inner Mongolia into a crucial hub for data centers.
Ulanqab, a city in Inner Mongolia with a population of around 1.5 million, has seen the opening or construction of nearly 100 data centers since 2016. Chinese companies have pledged to build projects in the city with an estimated combined capacity of 12.5 gigawatts, with over 70% of the commitments announced in just the past year.
This makes Ulanqab one of the fastest-growing compute clusters in Asia, according to a research note by Goldman Sachs. The city's high elevation and long, cold winters reduce the need for cooling, and it is close to Beijing for quick data transmission. Electricity is cheaper in Inner Mongolia than most other regions in China, driven by growing wind and solar energy and an abundant coal supply.
Chinese AI companies are now investing in their own infrastructure for the first time, rather than renting compute from cloud companies. The boom in Ulanqab data centers signals that Chinese AI companies are finally starting to build their own infrastructure. However, water scarcity is a problem, as the city receives only about 14 inches of rain per year.
The local government has had to shut off waterworks at night to manage peak demand. Despite this, Ulanqab has been a data center hotspot for decades, beginning with Huawei in 2016 and Apple in 2019. The area was designated as one of the main hubs of a nationwide project in 2021 to build data centers in China's western hinterlands.
While the high latency rates initially made these data centers suitable only for backup storage, AI has made them more useful for model training, which doesn't require real-time data transmission. Ulanqab's growth is driven more by commercial demand than government-led investment. The Chinese government plans to build a 2 gigawatt AI data center in Ulanqab powered by its own clean energy, but coal still accounts for about 37% of the region's electricity.
Written by urgent.news from Techmeme's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
