DeepSeek Is Developing Massive AI Data Center in Inner Mongolia

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Or sign-in if you have an account.(Bloomberg) — China’s DeepSeek is planning a massive artificial-intelligence data center in Inner Mongolia, according to people familiar with the matter, an ambitious move in computing infrastructure from the startup that’s shown it can compete with the leading AI models of Silicon Valley. 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DeepSeek aims to build its own new facility, while leasing additional capacity from other companies, the people said. More than a dozen firms have projects planned in the city, according to a third-party compilation of local government approvals.The company is pushing to bring at least part of its data center’s capacity online by the end of next year or early 2028, two of the people said. It is unclear what kind of chips DeepSeek will use for the project. Nvidia Corp.’s semiconductors are the industry standard for AI data centers, while Huawei Technologies Co. is China’s national champion in the field. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againDeepSeek didn’t immediately respond to an emailed request for comment outside of regular office hours.While US technology players like OpenAI and Anthropic PBC have taken the lead in pouring tens of billions of dollars into AI computing capacity, DeepSeek’s effort is part of a broader push by Chinese competitors to make sure they’re not left behind. A 1 GW AI data center would be far larger than anything now operational from a Chinese company, though still well behind the 3 GW and 5 GW projects from American companies. China’s Z.AI, formerly Zhipu, is also working on a 1 GW venture that it plans to fill with only Chinese-made chips.DeepSeek has publicly hinted at its ambitions for far more computing capabilities. In a current job posting for a data center role that could be located in DeepSeek’s home base of Hangzhou, Beijing or Inner Mongolia, the startup said the new hire will be directly involved in AI infrastructure buildout including a gigawatt-scale campus. With an average annual temperature of around 4 degrees Celsius, Ulanqab offers a naturally cold climate that helps reduce the energy required to cool power-hungry AI servers, making it an attractive location for players like China Mobile Ltd. DeepSeek, led by Liang Wenfeng, sits at the heart of China’s effort to compete globally in artificial intelligence. It stunned the tech industry early last year by introducing an AI model that delivered cutting-edge capabilities, produced with what it said were a fraction of the computing resources of competing models. DeepSeek has also led the way in creating low-cost, open-source services that have threatened the business prospects for American companies like OpenAI and Anthropic. Chinese AI services are often one tenth — or less — of the cost of US alternatives. China’s Moonshot added to that pressure this month with the debut of its Kimi K3 model, whose performance on industry benchmarks rivals top-tier offerings from the US leaders.China’s advances have fueled concerns that the US’s primary geopolitical rival is closing the gap in a critical technology. Beyond DeepSeek, Moonshot and Z.AI are a pack of aggressive competitors, including Alibaba Group Holding Ltd. and MiniMax Group Inc. This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.DeepSeek has begun preparations for an initial public offering and may file as soon as this year, Bloomberg News has reported. That comes after it closed a record $7 billion fundraising at a valuation of roughly $50 billion.The Trump administration believes that DeepSeek has skirted export restrictions, by using Nvidia’s Blackwell processors — which are effectively banned from sale to China — in a data center in Inner Mongolia, according to people familiar with the matter. Both OpenAI and Anthropic, meanwhile, have accused DeepSeek of what’s called distillation, or using the output of their AI models to train its technology with similar capabilities.DeepSeek’s effort in Inner Mongolia may be a sign that Chinese companies are developing the financial support to build out AI infrastructure, an area where Silicon Valley companies have historically led because of the US capital markets. A 1 GW data center equipped with the most cutting-edge AI accelerators would cost about $50 billion in investments, Nvidia Chief Executive Officer Jensen Huang has estimated. The cost of data centers does vary widely, depending on location and the AI chips they hold. AI data centers in China are typically far cheaper than in the US. —With assistance from Newley Purnell.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.