[News] Microsoft’s Rumored Data Center Lease Cuts Spark Concerns, Alarm Taiwan’s Server OEMs

Has the AI boom turned into a bubble? According to Bloomberg, Microsoft, as OpenAI’s biggest backer, has started canceling or not renewing a large number of data center lease agreements in the U.S., which raises concerns over Microsoft’s potential over-investment in AI computing power.

Bloomberg suggests that the leases totaled “a couple of hundred megawatts” of capacity, equivalent to about two data centers.

As per Economic Daily News, Microsoft is currently the world’s second-largest cloud service provider (CSP), with a 24% market share in the fourth quarter of 2024. Thus, its latest move of cutting back on data center lease agreements could affect key Taiwanese server OEM partners like Foxconn, Quanta, and Wiwynn.

Following the launch of DeepSeek’s open-source AI model in China, which claims to match U.S. technology at a much lower cost, investors have grown skeptical about the tech giants’ ongoing massive spending.

In response to the market speculation, Microsoft issued a press release on the 24th reaffirming its spending target for the fiscal year ending in June, as per Bloomberg. According to CNBC, Microsoft previously stated it plans to invest $80 billion in AI data centers during the period.

While Microsoft takes a more cautious approach, rivals are increasing AI investments. The Bloomberg report notes that recently, Amazon, Alphabet, and Meta committed $100 billion, $75 billion, and up to $65 billion, respectively, for AI infrastructure. Alibaba also announced it will invest over 380 billion yuan ($53 billion) in the next three years to lead in the field, the report adds.

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(Photo credit: Microsoft)