Inner Mongolia's Ulanqab becomes China's AI data center hub with 12.5 GW pledged

August 22, 2026 at 04:25 AM2 min

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Ulanqab, a city of 1.5 million in Inner Mongolia, has attracted nearly 100 data centers since 2016 with combined pledged capacity of 12.5 gigawatts. Chinese companies including DeepSeek, ByteDance, Alibaba, and Xiaohongshu are building their own AI infrastructure there, drawn by cheap electricity and cold winters. The boom strains local water supplies, with the water company already cutting service for seven hours nightly.

Key Facts

Nearly 100 data centers have opened or begun construction in Ulanqab since 2016.
Chinese companies have pledged projects with combined estimated capacity of 12.5 gigawatts in Ulanqab.
Over 70 percent of total capacity commitments in Ulanqab were announced in the last year.
OpenAI's $500 billion Stargate Project is set to reach 10 gigawatts of total capacity when complete.
The local water company in Ulanqab turned off several waterworks for seven hours each night last month to mitigate peak demand.

The Ulanqab Boom

Ulanqab, a city of about 1.5 million people in Inner Mongolia, has become the hottest place in China to build an AI data center. Nearly 100 data centers have opened or begun construction in the city since 2016. Chinese companies have pledged projects with a combined estimated capacity of 12.5 gigawatts in Ulanqab. Over 70 percent of total commitments were announced in just the last year, making it one of the fastest growing compute clusters in Asia, according to a Goldman Sachs research note published last week.

Drivers and Players

The city sits at high elevation on the Inner Mongolian Plateau and has long, cold winters, reducing energy needed for cooling. Electricity is cheaper in Inner Mongolia than almost anywhere else in China, driven by strong growth of wind and solar energy and an abundant supply of coal. DeepSeek is reportedly building a massive AI data center in Ulanqab, as are ByteDance, Alibaba, and Xiaohongshu. For the first time, Chinese AI companies are making big investments in their own infrastructure rather than renting compute from cloud companies.

Water Constraints

Ulanqab receives only roughly 14 inches of rain each year, about as dry as Denver. The local government is already struggling to provide enough water to meet resident demand before many planned data center projects are even up and running. Last month, the local water company in Ulanqab was forced to turn off several waterworks for seven hours each night to mitigate peak demand. Weather data from the local government shows data centers only require additional water for cooling during two months out of the year.