China Plans 12.5-GW AI Data Center Hub in Inner Mongolia

Ulanqab in China’s Inner Mongolia has emerged as a computing hub for artificial intelligence, with technology companies including Huawei, Tencent and DeepSeek building infrastructure for training and running large language models. The expansion highlights the physical costs behind China’s AI ambitions: data centers consume large amounts of electricity and require intensive cooling, placing additional pressure on water supplies in a region already vulnerable to scarcity and drought.

A recent report said 89 AI data centers have been established in Ulanqab. Heat generated by their servers is partly removed through water-intensive cooling and evaporation, raising concern that continued expansion could worsen local shortages and drought risks. The report called on operators to disclose water withdrawals, consumption and recycling data, and urged technology companies to share the cost of expanding the water, electricity and utility networks needed to support the computing parks.

Chinese artificial-intelligence startup DeepSeek is weighing a major expansion of its computing infrastructure as demand grows for the processing power needed to train and run large AI models. Ulanqab in Inner Mongolia offers access to land and power, while its cold climate could reduce the energy required to cool servers. A 1-gigawatt project would underscore the scale of infrastructure Chinese AI developers may need to support increasingly compute-intensive systems.

DeepSeek plans to build a large AI data center in Ulanqab with total capacity of 1 GW, according to the latest report, and is also considering leasing additional computing power. Part of the planned capacity is expected to begin operating by the end of 2027 or in early 2028. The company has not disclosed the project’s investment cost, equipment suppliers or a timetable for bringing the entire facility online.