(Bloomberg) — The UK plans to open a data center campus in south Wales, with developer Vantage Data Centers investing 10 billion pounds ($13.1 billion) in a facility near the Microsoft site.
The new hub is part of the Labor government’s continued bid to strengthen the UK’s technology sector. The government also announced that it would allocate £250 million to buy computing resources for UK start-ups and researchers working on artificial intelligence. The Department of Science, Innovation and Technology announced on Thursday that a separate funding line will subsidize the use of AI for drug discovery and treatment.
UK AI Minister Kanishka Narayan, who represents the Vale of Glamorgan constituency in South Wales, described the announcement as an effort to diversify technology activity across the country, where most resources are concentrated in London and university cities. The government wants to bet on areas where Britain has the most potential, such as semiconductor design and biotechnology.
“We’re focusing on areas where we have incredible strength,” Narayan said in an interview.
Labor is turning to technology as a means to grow the economy as it seeks to offset a £20bn financial deficit and combat lagging opinion polls. The UK is home to some prominent AI research institutes and start-ups, but many British technology companies are looking overseas for late-stage funding.
Tech investors have complained that Labour’s policies risk driving entrepreneurs away and limiting funding opportunities, but the day also brought news that entrepreneurs and high-income earners could get a fast-track route to UK residency.
Mr Narayan pointed to technology companies pledging to open offices or expand operations in the UK on Thursday, including startup Perplexity AI, AI coding company Cursor and chipmakers Cerebras and Grok.
At the heart of the government’s plan is something called the AI Growth Zone, an area to develop technology infrastructure with fast planning approvals and privileged access to the electricity grid. The new site in south Wales is the fourth such area announced by the Government.
Although the site is new, the spending promise is not. The government said Vantage Data Centers would spend £10bn on the new site as part of a £12bn commitment it made in the UK earlier this year. A representative for Vantage did not immediately respond to a request for comment.
Microsoft announced in 2023 that it would invest £2.5 billion in UK data centers over the next three years. A spokesperson for the company said this included a site in Newport, Wales, near the headquarters of the Office for National Statistics.
During President Donald Trump’s visit in September, the British government touted a £31bn investment commitment from US tech companies.
The UK remains one of Europe’s most expensive energy markets, handicapped by its ability to power major data centres. Earlier this month, the government announced plans to offer discounted electricity rates to companies that build facilities in areas where the grid creates excess capacity.
“The economics of investing in AI in the UK have fundamentally improved,” Narayan said.
His department said the new site in Wales would create more than 5,000 jobs over the next 10 years. The project includes multiple sites and “has the potential to leverage” more than 1 gigawatt of computing power by the “early 2030s,” Welsh Secretary of State Jo Stevens said in a statement.
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