On Friday, U.S. stocks plummeted due to Microsoft's drastic cuts in data center Channel Check, and I observed that this topic quickly gained traction over the weekend, with various Twitter influencers starting to debate after the market closed.
Rumor is this:
Rumor going around that $MSFT is paying penalties to get out of some data center contracts &amp; power agreements-- changing tone drastically on CAPEX growth. Might be another DeepSeek shockwave to the semi supply chain.
The trending discussion over the weekend is as follows:
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f71f412e-fed0-4a14-9dde-3124d7df2123.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f71f412e-fed0-4a14-9dde-3124d7df2123.png"/>
In fact, since January, some clients have been asking us whether Microsoft has cut IDC. We verified that indeed two IDCs were cut, Wisconsin Kenosha and Georgia Atlanta, and confirmed this through research and North American data center experts in early February. Historical minutes can also be checked through the Jiuqian minutes database, with the interview I conducted on February 9th.
Here are some details and key points.
The Wisconsin Kenosha data center covers 240 acres, and this plan is delayed by 3 years. The reasons for the delay are:
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<li>
Microsoft is not participating in the Stargate project, and the volume from Wisconsin is being transferred to Stargate.
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The Wisconsin Kenosha project was originally planned for a $3.3 billion CAPEX investment.
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After this cancellation, there will be no compensation for Stargate's CAPEX through other IDCs.
</li>
</ul>
The Georgia Atlanta data center covers 488 acres, and this plan is delayed by 1.5 years. The reasons for the delay are:
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<li>
Microsoft overestimated the demand around Atlanta; the actual demand measured is less than the supply, making it unnecessary to open this data center separately.
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Historically, the Atlanta area has often experienced oversupply situations, making it easy to overestimate; there are few enterprise clients here.
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No oversupply situation has been observed in other regions.
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</ul>
Due to the increase in utilization rates of other Deepseek IDCs:
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Outside of Atlanta, no issues with declining utilization rates have been observed; Atlanta is an exception
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After Deepseek, Azure saw a 15% increase in GPU utilization, which is expected to last for 6 months before returning to normal utilization.
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<li>
The increase in utilization is mainly due to Double Purchase, where customers test the new Deepseek model while using existing models.
</li>
</ul>
The expert also discussed the debugging situation at the Phoenix City IDC and Azure's CAPEX expectations.
Due to the complexity of the GB debugging process, it is estimated that the first batch of 10,000 to 20,000 cards at the Phoenix City IDC will go live in March, while the remaining 70,000 to 80,000 cards may not be operational until the end of May.
The expert believes that CAPEX will not grow quarter-on-quarter in the coming quarters, and there may even be a slight quarter-on-quarter decline in CAPEX a year later. However, the expert has always been relatively pessimistic, so this may not be a reliable reference for CAPEX.
Author of this article: , Source: Consensus Crusher, Original Title: &#34;Why Microsoft is Cutting Two Data Centers&#34;
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MSFT

Microsoft has decided to close two data centers located in Kenosha, Wisconsin, and Atlanta, Georgia, leading to a significant drop in computing power in the US stock market. Rumors suggest that Microsoft paid penalties to terminate certain data center contracts and power agreements, which may impact the semiconductor supply chain. The investment plan for the Kenosha data center has been delayed by 3 years due to Microsoft's non-participation in the Stargate project, while the investment plan for the Atlanta data center has been delayed by 1.5 years due to overestimated demand

- Microsoft has significantly reduced its data center operations, leading to a sharp decline in U.S. stock performance, with discussions intensifying over the weekend.  
- The company has confirmed the cancellation of two data centers in Wisconsin and Georgia, delaying investments and indicating a shift in capital expenditure growth.  
- Experts predict that capital expenditures may not see quarter-on-quarter growth in the coming quarters, with potential slight declines in a year, although this view may be overly pessimistic.