DeepSeek Plans 1-Gigawatt AI Data Center in Inner Mongolia, Bloomberg Reports

Chinese artificial intelligence startup DeepSeek is planning to build a large-scale AI data center in Inner Mongolia, a move designed to significantly boost its computing infrastructure as it competes with top-tier models from Silicon Valley. The Hangzhou-based company intends to add one gigawatt of computing capacity in the city of Ulanqab, according to a Bloomberg News report citing people familiar with the matter.

Project Details

The planned facility will be located in Ulanqab, a city approximately 350 kilometers (about 217 miles) northwest of Beijing that is rapidly becoming a hub for data centers. DeepSeek's strategy involves a hybrid approach of constructing its own facility while also leasing additional capacity from other operators in the area, the anonymous sources told Bloomberg.

According to the report, DeepSeek is targeting a launch for at least part of the data center's capacity by the end of 2027 or early 2028. The development underscores the intense global demand for the massive computational power required to train and operate advanced AI systems.

Strategic Context and Chip Uncertainty

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This expansion represents a critical step for DeepSeek in the global AI arms race, providing the necessary power to develop more sophisticated models. However, a key uncertainty surrounding the project is the type of semiconductors that will be used. The choice of chips is pivotal for performance and is complicated by geopolitical factors.

• The industry standard for AI data centers remains high-performance chips from Nvidia Corp. (NASDAQ:NVDA), though access to its most advanced products in China is restricted by U.S. export controls.
• Huawei Technologies Co. stands as China's primary domestic alternative, developing its own line of AI accelerators as a national champion in the field.

Ulanqab is an increasingly popular location for such projects, with a third-party compilation of local government approvals indicating that more than a dozen firms have data center projects planned in the city.