Microsoft reportedly quits Nscale’s UK data centre weeks before its IPO

Microsoft has pulled out of a deal to anchor Nscale’s first British data centre, the Telegraph reported. The move comes as the AI cloud startup prepares to go public.

The site in Loughton, Essex, has faced a string of delays, Bloomberg reported, citing the Telegraph. The paper did not say why Microsoft walked away.

Authorities have told Nscale not to expect a power supply until the 2030s. TNW reported in July that the grid could not connect the site in time for its planned opening.

‘Strong and long-term’

Nscale said it was still committed to the site and was looking at other power sources and UK locations.

“Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts,” a spokesman told the Telegraph.

Microsoft did not comment to the Telegraph, and did not immediately respond to Bloomberg.

Bad timing

Nscale is seeking to raise as much as $3bn in an IPO as soon as this month. Microsoft and Anthropic account for about 85% of its contracts, according to its IPO filing.

Anthropic agreed in August to spend $45bn on Nscale compute over six years. Microsoft has also signed a letter of intent for a West Virginia campus.

Nscale’s flagship site in Norway is six months behind schedule, Bloomberg said. Only 6.4 megawatts of a planned 30-megawatt data centre is running.

Neocloud jitters

Investors are already wary of neoclouds, the companies racing to build AI computing hubs. Many are borrowing heavily to fund the build-out.

CoreWeave shares fell 25% last week, their worst week since November. Australia’s Firmus also scrapped its IPO after failing to win enough support.