Microsoft to invest $10 billion to build an AI data centre in Sines, Portugal

Microsoft Corp. has announced plans to invest approximately $10 billion in an AI data centre along the Portuguese coast. Following this strategic move, the tech company aims to expand its presence in Europe with one of the biggest investments on the continent this year. 

In a statement, the tech giant revealed that the $10 billion is intended for a data centre park in Sines, a Portuguese coastal town along the Atlantic coast, approximately 150 kilometres (93 miles) south of Lisbon. 

To successfully construct this facility, Microsoft has decided to collaborate with Start Campus, a Portuguese developer, and British startup Nscale.

This news was released after Microsoft President Brad Smith shared the funding details with a local newspaper, Jornal de Negócios, during the Web Summit in Lisbon.

Sines solidifies its position as an investment hub in Portugal

Microsoft’s recent plan has sparked controversy in the tech industry. To address these debates, a representative from the company confirmed the amount to be invested but did not disclose further details concerning this strategic move.

On the other hand, a spokesperson from Start Campus weighed in on the situation. The spokesperson hinted that the $10 billion figure aligns with the ongoing talks about the next phase of development, following the launch of the first of six planned buildings in March.

The representative’s statement follows a recently released report highlighting that Microsoft had previously struck a multi-year deal to rent space at the Sines sites in October. 

This deal exemplifies the growing trend among tech firms to meet the surging demand for AI services. To support this claim, sources pointed out that Microsoft is improving its computing infrastructure to stay competitive.

Still, capacity shortages remain a significant challenge in this sector. To address this issue, the tech giant has rushed to strike a bargain with several “neocloud” providers. Examples of these companies include Nebius Group NV. and  CoreWeave Inc., which provide high-performance cloud computing.  Moreover, Microsoft plans to lease capacity from Nscale in the UK and Norway.

Considering the growing interest of tech companies in Sines, analysts discovered that the coastal town is gradually becoming an investment hub with a population of about 15,000. The findings also revealed that this town has undersea cables that connect Europe to Africa and Brazil. Google is also expected to add a cable to South Carolina soon.

Meanwhile, China eyed Sines for expansion after CALB Group Co. initiated a project to establish a €2 billion ($2.3 billion) battery factory in the town in May. It is worth noting that Sines is the proposed site in Portugal for an EU-supported AI “gigafactory.”

Portugal intends to turn its tourist attraction sites into tech hubs

Currently, the government of Portugal is depending on the city to boost the national economy for the 21st century. Sources pointed out that this optimism mounted after the government realized that its coast, located just a two-hour drive south of Lisbon, served as a landing point for undersea cables connecting Europe with Africa and Brazil.

Following this significant shift from a tourist attraction site to a tech hub, the country adopted a new goal of providing tech services across Europe, thereby reducing its reliance on tourism as a source of economic growth. Tourism in Portugal accounts for approximately 25% of the country’s GDP.

To embrace the tech industry, Start Campus opened up the first building of an €8.5 billion ($9.9 billion) data centre in March, which sources believe will eventually rank among the largest in Europe. Additionally, PSA, a Singapore-based company that manages containers at the town’s deepwater terminal, has announced an expansion of its capacity.

Projects in Sines — the birthplace of Vasco da Gama, the 15th-century explorer whose efforts helped establish Portugal’s empire — represent investments that contribute approximately 4.6% of the nation’s GDP.

The region is central to transforming the Portuguese economy by establishing a logistics hub that operates on both European and Atlantic levels,” Manuel Castro Almeida, Portugal’s minister of economy, said.

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