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What to know about the new AI data center in Wisconsin

Written by on May 8, 2024

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(MOUNT PLEASANT, Wis.) — President Joe Biden is set to announce on Wednesday a $3 billion investment by tech giant Microsoft to build an artificial intelligence data center in southeast Wisconsin.

The sprawling facility will be located on the same plot of land where, in 2018, former President Donald Trump announced a multi-billion dollar investment by Taiwanese company Foxconn that largely failed to materialize.

The project sits at the convergence of several key Biden administration goals: upgrading U.S. infrastructure, rejuvenating domestic manufacturing and stewarding the responsible development of AI.

Here’s what to know about the economic impact of the project, the significance of the location and why Microsoft is building a data center in the first place.

What’s the expected economic impact of the data center?
The data center in the midsize city of Racine, Wisconsin, is expected to create 2,300 construction jobs and an additional 2,000 permanent jobs at the facility, the White House said in a press release on Wednesday.

The burst of employment will coincide with a venture undertaken by Microsoft to open a so-called “Datacenter Academy,” which will train roughly 1,000 people for data center and other technology roles by 2030, the White House said.

Microsoft will also open an innovation lab in the region, which will aim to educate about 1,000 business leaders on how to adopt AI for their enterprises, the White House added.

In a statement, Microsoft President Brad Smith said the data center would help restore the manufacturing sector in Wisconsin. In the 1960s and 70s, the state lost thousands of manufacturing jobs when companies relocated plants overseas.

“Wisconsin has a rich and storied legacy of innovation and ingenuity in manufacturing,” Smith said. “We will use the power of AI to help advance the next generation of manufacturing companies, skills and jobs in Wisconsin and across the country.”

The datacenter makes up a portion of the $6.9 billion invested in infrastructure, clean energy and semiconductor projects in Wisconsin since Biden took office, the White House said, part of an administration initiative devoted to domestic industry called “Invest in America.”

In all, roughly $540 billion have been invested nationwide as part of the Biden administration’s initiative, according to the White House.

What’s the significance of the location of the project?
The site of the Biden announcement on Wednesday marks the same location where Trump touted a different corporate investment six years ago.

Back then, Trump boasted of a $10 billion investment by electronics manufacturer Foxconn, which he said would create about 13,000 manufacturing jobs.

Despite razing nearby homes and attracting about $3 billion in state tax incentives, Foxconn has largely failed to deliver on its lofty goals. In 2022, the company said it employed more than 1,000 workers in the state, The Milwaukee Journal Sentinel reported.

The Biden administration has characterized the AI data center as an effort to make up for the challenges endured by the local area under Trump. It will “showcase a community at the heart of his commitment to invest in places that have been historically overlooked or failed by the last administration’s policies,” the administration said.

Why open a data center in the first place?
The computing power required to train and deploy artificial intelligence tools like ChatGPT has triggered a spike in demand for data centers.

The complexes, which typically span 100,000 square feet, provide the brick-and-mortar infrastructure underlying the explosion of the AI sector.

Microsoft, which owns a major stake in ChatGPT-maker OpenAI, has become the most valuable company in the world. Shares of the company have jumped 9% so far this year.

In 2022, roughly 2,700 data centers in the U.S. accounted for over 4% of the nation’s electricity use, according to an International Energy Agency report released in January. By 2026, that share of electricity use is expected to reach 6%.

The proportion of U.S. electricity use for data centers is expected to continue to climb in the ensuing years, the report said, citing in part anticipated broader adoption of AI.

By 2026, the AI industry alone is expected to consume at least 10 times its energy demand from just three years prior, the IEA report found.

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