Data Centre Firms: AI Bottleneck Shifts to Power and Labour
Data centre firms have noted that the AI bottleneck is no longer primarily related to chip supply, but rather power and skilled labour. This revelation came from executives at NTT Data, Brookfield, and Infosys, who spoke at Bloomberg’s New Economy Forum in New Delhi on Tuesday.
According to Bloomberg, these executives highlighted the following:
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Power Constraints: In Europe, grid connections for data centres in congested markets can take up to ten years or more, with Amsterdam at about a decade and Frankfurt facing upgrades until the 2030s. Denmark has even stopped taking bookings due to power grid limitations.
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Labour Shortages: Abhijit Dubey, CEO of NTT Data, referred to talent as the bottleneck that often goes unnoticed. An electrician in the US earns approximately $200,000, and sourcing the right equipment can take as long as 42 weeks.
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Capital vs. Constraints: While Broadcom's CEO previously suggested capital might be the biggest constraint, Dubey claimed capital is not an issue. However, others, like Connor Teskey from Brookfield Asset Management, agreed that demand will outstrip supply beyond the end of the decade, emphasizing the need to execute projects.
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Regulatory and Public Resistance: There have been numerous rejections of data centre projects globally. Scotland, for instance, has a resolution to freeze all new builds, while Dublin turned down a Google data centre over energy concerns. Grassroots opposition also blocked $130B worth of US projects in the first quarter alone.
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Risks in AI Infrastructure: Infosys' Salil Parekh pointed to a third risk: the backlash in Western markets and regulatory changes, such as the recent resolution in Scotland.