Microsoft reportedly cancels Nscale deal for 50 MW UK AI campus
Loughton was due to host about 23,000 chips from early 2027, while Nscale is pursuing an IPO after announcing convertible financing.
Julian Okafor
A planned 23,000-chip AI cluster in Essex is losing its anchor customer before its scheduled 2027 start, according to a newspaper report. Microsoft Corp. NASDAQMSFT, the Azure cloud operator, has cancelled its agreement for a planned 50-megawatt campus at Loughton, The Telegraph reported on Sunday.
The partner is Nscale Limited, a privately held British AI cloud provider that combines data centres, computing equipment and software. Its Oct. 15, 2025 announcement specified about 23,000 graphics processors for Microsoft's Azure services, with deployment beginning in the first quarter of 2027.
Microsoft shares NASDAQMSFT closed down 1.93 per cent at US$529.05 on Nasdaq on Oct. 16 at 4 p.m. EDT. That close preceded the Oct. 18 report and provides no measure of the market's response to it.
The Telegraph said Microsoft was Loughton's only announced customer and reported that grid bosses did not expect a power supply until the 2030s. Nscale said other Microsoft contracts were unaffected. The reported exit follows its Sept. 25 announcement of US$3.36 billion in convertible financing ahead of a proposed IPO.
The Original Plan Called For A 2027 Start
Nscale's October 2025 announcement described a 50 MW facility that could expand to 90 MW. Those figures describe the planned campus, while the newspaper's account raises a separate issue about when electricity would become available.
Nscale's response tied the setback to electricity availability across London and maintained its commitment to the site. The company said it was considering alternative power sources and other expansion locations in Britain.
"Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts," an Nscale spokesperson told The Telegraph.
The response did not provide a replacement opening date or identify another customer for Loughton. The newspaper did not name the grid operator behind the reported connection timetable or publish its connection notice.
Mugglehead has tracked the distinction between announced power frameworks and operating capacity. At Loughton, the original 2027 deployment schedule and the reported electricity delay now leave the proposed computing capacity without an established delivery date in the accounts reviewed.
Read more: Venture Global signs power frameworks for 10 GW data centre plan
Nscale Announced Convertible Financing Before Its IPO
The reported cancellation comes after Nscale announced US$3.36 billion in convertible loan-note financing on Sept. 25. That release put the company's total contracted value above US$103 billion, without allocating a portion to Loughton.
The financing comprised an initial US$2.36 billion tranche at closing and a further US$1 billion commitment expected to fund in mid-November 2026. Nscale said the notes would convert automatically into shares when its initial public offering was completed.
Nscale filed a registration statement with the U.S. Securities and Exchange Commission on Sept. 18 for a proposed IPO. The preliminary prospectus said it intended to apply for a New York Stock Exchange listing, while leaving the offering price range and total proceeds blank.
The September financing release described funding to expand Nscale's AI cloud platform, including power plants, liquid-cooled data centres and computing clusters. It did not earmark the financing for Loughton, and neither that release nor the October 2025 agreement announcement disclosed site-specific debt or a termination payment.
For the Essex project, the reported loss is therefore an anchor customer's planned business with no separately disclosed contract value in those announcements. The documents do not establish how much financing would need to be replaced or whether Microsoft owes a cancellation payment.
Microsoft's UK Commitment Covers More Than Loughton
Microsoft's Sept. 16, 2025 investment announcement committed US$30 billion to UK AI infrastructure and ongoing operations. The commitment covered 2025 through 2028 and allocated US$15 billion to capital expenditure, including the planned supercomputer partnership with Nscale.
The other half supported Microsoft's ongoing UK operations, and the announcement also described expansion of its own data-centre footprint. The national investment total consequently cannot serve as a price for the Loughton agreement.
Nscale's October 2025 agreement announcement covered roughly 200,000 processors across four countries. It scheduled Microsoft services in Texas from the third quarter of 2026 and in Portugal from the first quarter of that year; those were announced schedules, rather than evidence here of completed deployments.
The reported Essex cancellation concerns one location within that broader relationship. Nscale's assurance that other contracts remain unaffected does not supply a replacement UK location, power arrangement or delivery timetable for the Loughton capacity.
Microsoft's published investor calendar lists its fiscal 2027 first-quarter earnings call for Oct. 28. That call offers a scheduled opportunity for management to address whether the reported Loughton exit changes the timing or cost of its UK capacity.
