Why is OpenAI Pulling Out of its Stargate Project in the UK?
OpenAI has put its Stargate UK infrastructure project on hold, signalling a shift in momentum for the country’s AI infrastructure ambitions.
The company attributed the pause to a combination of high energy costs and continued regulatory uncertainty, both of which are impacting the viability of large scale AI data centre deployment.
First unveiled in September 2025 with hardware partners Nscale and NVIDIA, the project was positioned as a major step towards strengthening the UK’s sovereign AI compute capacity and supporting next generation AI workloads.
At the time, OpenAI CEO Sam Altman said: “The UK has been a longstanding pioneer of AI and is now home to world-class researchers, millions of ChatGPT users and a government that quickly recognised the potential of this technology.
“Stargate UK builds on this foundation to help accelerate scientific breakthroughs, improve productivity and drive economic growth.
“This partnership reflects our shared vision that with the right infrastructure in place, AI can expand opportunity for people and businesses across the UK.”
The decision to scale back marks a change in direction for a programme widely seen as integral to the UK’s broader AI and compute strategy.
Data centre at Cobalt Park paused
One of the key sites under consideration by OpenAI was Cobalt Park in North Tyneside, alongside a number of other locations that were not publicly confirmed.
Plans initially called for the deployment of up to 8,000 GPUs in early 2026, with capacity expected to grow to around 31,000 GPUs over time.
The infrastructure was intended to support demanding AI applications across sectors including finance, regulated industries and national security.
However, development has now stalled.
Operators continue to face challenges linked to some of the highest industrial electricity prices globally, as well as delays in securing grid connections – both of which are slowing the rollout of AI infrastructure across the UK.
Nscale declined to comment on the situation, while NVIDIA remains silent on this change in plans.
In comparison to OpenAI’s US Stargate programme, which carries a US$500bn investment commitment over four years, the North Tyneside site was expected to be significantly smaller, reflecting differing market conditions and infrastructure readiness.
An OpenAI spokesperson confirmed the pause, while reinforcing the company’s long term interest in the UK AI ecosystem.
"We see huge potential for the UK's AI future," the spokesperson said in a statement.
"London is home to our largest international research hub and we support the government's ambition to be an AI leader."
Costly copyright concerns
Regulatory complexity is also playing a key role in delaying progress.
According to industry sources, uncertainty around copyright rules and the use of training data remains a concern for AI developers considering large scale infrastructure investment.
Earlier this year, lawmakers explored proposals that would have introduced a broad copyright exception, allowing AI models to be trained on existing content with an opt out mechanism for rights holders.
While this approach aimed to streamline AI development, it faced strong resistance from the creative industries.
A government report published in March found that consultation respondents overwhelmingly opposed the proposal.
In the absence of clear legal guidance, companies are taking a cautious approach to committing resources to new AI infrastructure projects.
Government response
The halt to the North East site presents a setback for the UK’s ambitions to expand its AI capabilities and digital infrastructure footprint.
The original agreement, announced in September 2025, formed part of a wider £31bn (US$41.6bn) investment initiative intended to drive economic growth through technology.
Secretary of State for Science, Innovation and Technology, Liz Kendall previously highlighted the pace of expansion in the sector, noting that it was growing 23 times faster than the wider economy.
A UK Government spokesperson pointed to the country’s continued success in attracting investment, with more than £100bn (US$134.2bn) in private funding secured to support innovation, jobs and infrastructure.
"Our focus is on continuing to create the right conditions for investment in the UK's AI and data centre infrastructure," the spokesperson said.
"We are continuing to work with OpenAI and other leading AI companies to strengthen UK compute capacity."
Local presence
Despite the pause, OpenAI has not ruled out future infrastructure development in the UK and remains in discussions with Nscale on potential next steps.
"AI compute is foundational to that goal – we continue to explore Stargate UK and will move forward when the right conditions such as regulation and the cost of energy enable long-term infrastructure investment," the OpenAI representative stated.
Alongside infrastructure considerations, the company is progressing other commitments outlined in its July 2025 Memorandum of Understanding, including the adoption of advanced AI models in public services and continued investment in local talent.
"In the meantime, we are investing in talent and expanding our local presence, while also delivering on the commitments under our MOU with the Government to adopt frontier AI in UK public services," they added.
