From Bloomberg, April 1:
The struggle to manufacture transformers, switchgear and batteries domestically has forced the US to rely on imports, delaying data center construction.
In the red dirt of Abilene, Texas, more than 6,000 workers travel around on electric buggies, spending day and night constructing a massive data center that will feed the world’s growing artificial intelligence needs. When completed this year, the eight sprawling buildings — which OpenAI will use — will consume 1.2 gigawatts of power, or enough electricity for nearly 1 million American households.
As the global AI race heats up, there is a huge rush to build data centers fast. There’s no lack of money chasing these projects, with tech giants Alphabet Inc., Amazon.com, Meta Platforms Inc. and Microsoft Corp. committed to spending more than $650 billion this year alone. Yet neither ambition nor capital is enough to materialize all the necessary components for these power-hungry computers.
Almost half of the US data centers planned for this year are expected to be delayed or canceled. One big reason is the shortage of electrical equipment, such as transformers, switchgear and batteries. They are needed not just for powering AI, but also for building out the grid that is seeing increased consumption from electric cars and heat pumps. US manufacturing capacity for these devices cannot keep up with demand, and the scarcity has caused data center builders to rely on imports.
Electrification is a key solution to both tackling climate change and powering AI ambitions. But America’s AI prowess on computer chips and cutting-edge software is being hamstrung by the country’s inability to manufacture the electrical parts. “There’s not enough domestic capacity to go around, so people are pretty much forced to go to the export market,” says Benjamin Boucher, senior analyst with Wood Mackenzie.
The import dependence is putting data center companies in a bind. “There’s only going to be one winner,” President Donald Trump said in December, “and that’s probably going to be the US or China.” While he wants the US to win, his America First doctrine calls for installing trade barriers to cut imports.
Data centers consuming as much as 12 gigawatts of power are supposed to come online in 2026 in the US, according to analysts at market intelligence firm Sightline Climate, who will be releasing a new report in the coming weeks. However, only a third of that is currently under construction, Sightline estimates.
Crusoe won the contract to build the Texas data center campus because of its promise of speed. Cully Cavness, Crusoe’s chief strategy officer and co-founder, says the company pledged to get a portion of the data center powered up in less than a year after starting construction. The secret to achieving that was buying enough of the right electrical equipment through early orders, securing some supplies before export barriers were erected.
Electrical infrastructure adds up to less than 10% of the total cost of the data center, but it’s impossible to build the operation without it. “If one piece of your supply chain is delayed, then your whole project can’t deliver,” says Andrew Likens, Crusoe’s energy and infrastructure lead. “It is a pretty wild puzzle at the moment.”
Most companies contacted by Bloomberg News declined to comment on the problems they are facing or where they source their equipment from. The few that responded highlighted the solutions they have enacted. Spokespeople for Amazon and Microsoft said they plan electrical equipment procurement ahead of time when building their data centers, and a spokesperson for Equinix Inc. pointed to a recent investment in a manufacturing facility that makes switchgear. Google, Oracle, Nebius Group NV, and Coreweave Inc. declined requests to comment....
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