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China built hundreds of AI data centers to catch the AI boom. Now many stand unused.
The country poured billions into AI infrastructure, but the data center gold rush is unraveling as speculative investments collide with weak demand and DeepSeek shifts AI trends.
“The growing pain China’s AI industry is going through is largely a result of inexperienced players—corporations and local governments—jumping on the hype train, building facilities that aren’t optimal for today’s need,” says Jimmy Goodrich, senior advisor for technology at the RAND Corporation. This gold-rush approach meant that the push to build AI data centers was largely driven from the top down, often with little regard for actual demand or technical feasibility, say Fang, Li, and multiple on-the-ground sources, who asked to speak anonymously for fear of political repercussions. One industry source, who requested not to be identified under his company policy, confirmed that the H20, a lighter, faster model optimized for AI inference, is currently the most popular Nvidia chip, followed by the H100, which continues to flow steadily into China even though sales are officially restricted by US sanctions.
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