OpenAI’s much-trumpeted plans to build a major data centre in the north-east of England have ground to a halt, dealing a significant blow to Sir Keir Starmer’s strategy of placing artificial intelligence at the centre of Britain’s economic growth.
The maker of ChatGPT announced last September that it would bring its Stargate programme, a global data centre initiative originally valued at $500bn (£378bn), to British shores through a partnership with Nscale, the UK-based data centre operator. The initial plan envisaged housing approximately 8,000 Nvidia AI processors at Cobalt Park on Tyneside during the first quarter of 2026. That deadline has now passed without a spade in the ground, and OpenAI has declined to offer a revised timetable.
The reasons behind the delay remain unclear, though commercial negotiations between the parties are understood to be continuing. Both OpenAI and Nscale refused to comment on the state of play.
The Stargate concept was first unveiled by Sam Altman, OpenAI’s chief executive, at a White House press conference in January 2025 alongside Donald Trump. Altman subsequently pledged to extend the programme internationally, with the UK earmarked as a key location. In a government press release at the time, he described Stargate UK as part of a “shared vision” to expand opportunity through the right infrastructure.
The project was enthusiastically embraced by ministers, who have sought to position Britain as a global leader in AI. OpenAI further signalled its commitment to the UK by appointing George Osborne, the former Conservative chancellor, to spearhead its international expansion.
Yet the Tyneside setback is far from an isolated case. In the United States, negotiations over Stargate’s broader rollout have proceeded sluggishly, with key backer SoftBank among those yet to finalise terms. A planned expansion of a major site in Texas, being developed with the American data giant Oracle, was quietly shelved earlier this year.
The wider industry is grappling with similar headaches. Technology groups have collectively committed to spending hundreds of billions of dollars on data centres to satisfy surging demand for AI applications, but delivery is proving far harder than the headline figures suggest. Research by Sightline Climate indicates that up to half of all large-scale data centre projects are now running behind schedule, hampered by planning difficulties and constraints on energy supply.
Nscale, valued at $15bn and counting Sir Nick Clegg, the former deputy prime minister, among its board members, has itself been forced to push back timelines on a separate development in Loughton, Essex, as Business Matters reported last week.
Critics have been quick to seize on the lack of progress
Tom Hegarty, a spokesman for Foxglove, the campaign group that has raised concerns about the environmental impact of the data centre boom, said the Stargate UK project amounts to little more than a press release issued eight months ago.
The government maintained that it remains focused on fostering the right conditions for investment. A spokesman said ministers are continuing to work with OpenAI and other leading AI firms to strengthen the UK’s computing capacity. Whether that reassurance will be enough to quieten growing scepticism about the pace of delivery is another matter entirely.
