OpenAI has halted progress on its planned Stargate UK artificial intelligence (AI) infrastructure project, citing regulatory uncertainty and high energy costs as the main hurdles.
The initiative was announced during President Donald Trump’s state visit in September and was presented as a major boost to the country’s AI ambitions under Prime Minister Keir Starmer and Technology Secretary Liz Kendall.
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The suspension represents a setback in the government’s efforts to attract large-scale AI investment.
As part of the proposal, OpenAI was looking to lease up to 8,000 advanced chips from Nvidia through London-based data center operator Nscale in early 2026.
This capability was expected to be rolled out to several locations in the UK, including Cobalt Park in the north-east of England.
However, the company is not proceeding with a chip lease agreement.
The decision highlighted the widespread difficulties of scaling AI infrastructure in the UK under current cost and regulatory conditions.
A spokesperson told POLITICO that OpenAI “continues to explore Stargate UK” but will only move forward “if the right conditions, such as regulations and energy costs, allow for long-term infrastructure investment.”
The company added that a predictable framework, including copyright rules, is central to investment considerations.
The UK government recently withdrew a proposal to allow AI developers to use copyrighted material unless rights holders opted out, prompting criticism from the tech industry.
The report cited sources as saying OpenAI continues to work with governments on the use of AI in the public sector and plans to expand its research presence in London.
OpenAI and Nscale continue commercial negotiations, the report added.
The government has identified five ‘AI growth zones’ across the UK, including the north-east of England, and is implementing support measures such as planning support, access to the electricity grid and energy cost relief from 2027.
These projects are expected to be completed by 2030 and create more than 15,000 jobs.
Despite this, several sites, including Cullum, Oxfordshire, and North Wales are yet to secure private investment partners, and other development timelines have been delayed.
Separately, a planned data center project in Essex involving Microsoft and Nscale has been delayed from 2026 to the second quarter of 2027, pending access to new Nvidia chips and full planning approval.
