OpenAI’s Stargate Pause Puts 5,000 UK Jobs, AI Growth Plans at Risk

OpenAI has suspended plans to develop a much-anticipated AI data center in the northeast of England, citing energy costs and regulations as major factors in its decision.

Dubbed Stargate UK, the UK Government announced the data center project last September, coming as part of a £31 billion ($41.6 billion) UK-US tech agreement that involved American heavyweights such as Microsoft, Nvidia, Google, and OpenAI.

However, OpenAI has confirmed in a statement that it’s pausing plans for the center, undermining the UK government’s aims to develop an “AI Growth Zone” in the northeast region and create up to 5,000 jobs.

“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,” an OpenAI spokesperson told US news outlet POLITICO.

A blow to the UK’s ‘sovereign compute’ dreams

In its original release on Stargate UK in September 2025, the ChatGPT developer revealed plans to deploy as many as 8,000 GPUs by the end of Q1 2026, with a long-term ambition to scale up to 31,000 GPUs.

OpenAI, partnering with Nvidia and London-based AI infrastructure firm Nscale for the project, claimed the data centre would strengthen “the UK’s sovereign compute capabilities,” enabling it to run its models on UK-based servers for localized and sensitive use cases.

The BBC has reported that the company may have had concerns that the UK Government would renege on earlier plans to permit AI developers to train models on copyrighted materials without a licence, with current government policy on this question now unclear following a backlash from musicians such as Elton John and Dua Lipa.

Not the first OpenAI cancellation in recent weeks

OpenAI’s confirmation that it’s canning Stargate UK activity also comes a few weeks after a freedom of information request, submitted by AI consultancy Valliance, revealed that the UK government had not trialled or tested any of OpenAI’s technology.

This was despite the fact that both parties had signed a memorandum of understanding in July 2025, providing a “non-binding” commitment to examine how AI models could be deployed by governmental agencies and potentially “help civil servants work more efficiently.”

It was also towards the end of March that OpenAI shuttered its video-generation app, Sora, while pulling out of a related $1 billion content deal with Disney. The company said it had closed Sora in part to help it focus on other areas, including robotics and artificial general intelligence.

Sora had reportedly generated only $1.4 million in in-app revenue since its launch in September 2025, despite surpassing 1 million downloads faster than ChatGPT.

Also worth a read: Meta just unveiled Muse Spark, a new multimodal AI model designed to power its apps and compete with OpenAI and Google in the next wave of reasoning-focused AI.