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What you need to know about Microsoft’s big investment in Wisconsin data centers and workers.

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6 months ago

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What you need to know about Microsoft’s big investment in Wisconsin data centers and workers.

Microsoft’s quick movement in developing its Mount Pleasant data center and a newly unveiled plan to train more than 100,000 AI workers and create new resources for businesses adds up to billions of dollars in investment that the company’s president said can ensure Wisconsin’s role as a manufacturing power house for decades.

The company announced it will spend $3.3 billion by 2026 to build the initial phase of its data center development, but that’s merely the architecture for success, Microsoft President Brad Smith said.

Equally important, he said, is an investment in training that is expected to help more than 100,000 workers learn cutting-edge AI-related skills, STEM programming for middle school students, summer job opportunities for high school students and tools for business leaders to learn how to most successfully tap the power of artificial intelligence in their operations.

Here’s what to know about the Microsoft development:

Data centers are the heart of the internet, cloud computing and AI

Outside, looking in, data centers are relatively simple things, albeit simple things that run on cutting edge technology.

The best comparison is to a warehouse, one that is packed with computer data servers that operate in tandem to process massive amounts of data for artificial intelligence applications and other data-heavy uses. Microsoft’s data centers are interconnected to create what’s referred to as “the cloud,” a seamless platform that allows users to access their data when and where they want.

One of the world’s largest cloud computing service providers, Microsoft has more than 300 data centers worldwide.

A data center can be a large contributor to the local tax base – Microsoft’s initial pledge was to add $1 billion in taxable property value in just the first, two-building phase of construction. It’s now $3.3 billion but that still only represents a portion of what Microsoft is likely to build in the future.

This week, the company said that phase of building is expected to lead to the creation of 2,000 data center jobs.

More: Microsoft Racine County data center expansion, new AI training focus of Biden visit to state

Microsoft’s training initiatives aim to bring benefits of AI, datacenters to Wisconsin workers and businesses

Smith in an interview said construction of the data center alone can’t be counted as a success, instead it needs to be tied to workforce development, job creation and helping companies develop strategies for incorporating AI in their operations.

In Wisconsin, where more than 9,000 manufacturing businesses support nearly 500,000 jobs, those training and business support initiatives will be heavily focused on helping manufacturing companies and their workforce adapt to what Smith called “the AI economy.”

The slate of new initiatives to help them get there includes:

  • Partnering with the University of Wisconsin’s Connected Systems Institute and Gateway Technical College to establish an an AI Co-Innovation Lab, an immersive training program for companies learning to operate in an AI environment. Microsoft has two other labs, both on the West Coast.
  • Quick-hitting bootcamp-style training in AI-related skills for 100,000 workers who need to learn new skills to compete for good-paying tech jobs.
  • Expanding Microsoft and the Green Bay Packers’ TitletownTech business development and acceleration partnership into Milwaukee. The effort received $500,000 from WEDC to help set up offices at UWM’s UWM’s Connected Systems Institute.
  • Opening a data center academy at Gateway Technical College that will train up to 200 students a year as data center technicians. who could be hired to work at Mount Pleasant or at other regional data centers.

Microsoft has an extensive history in Wisconsin

Microsoft’s history in Wisconsin begins with its corporate leadership, President and Vice Chairman Brad Smith and CEO Satya Nadella.

Smith was born in Milwaukee and lived in the state until he graduated from Appleton West High School. Nadella received a masters degree in computer science from the University of Wisconsin-Milwaukee in 1990.

The company’s business presence in the state dates to 2017 when Microsoft chose northeast Wisconsin as one of six pilot locations for its Techspark initiative to spur technology development, education and access across the country. Later that year, it partnered with the Green Bay Packers to create TitletownTech, a business support initiative started in 2019 to provide venture capital and business development resources to technology entrepreneurs. 

In 2021, Milwaukee was chosen as one of eight cities where Microsoft would pilot a program to bring low-cost internet service to urban residents.

A year later the company announced its intent to develop a data center in Mount Pleasant.

All of that history contributed to the company’s recent announcements, and most of the players will be involved as it expands AI training and support programs in southeast Wisconsin.

More: How luck helped the Green Bay Packers, Microsoft launch a $95 million venture capital firm

Microsoft has moved fast on Mount Pleasant data center

When Microsoft first announced its interest in acquiring land in Mount Pleasant’s Wisconsin Innovation Park in March 2003, its goals were modest compared to where they are today.

At the time it promised a $1 billion investment in what would be two data center buildings at 90th Street and County KR. It’s contractor, Walsh Construction began building the first building just months after Microsoft bought the 315-acre parcel for $50 million in May 2023. Construction of the first building was underway just months later. It is expected to be complete in 2026.

By the end of the year, Microsoft had closed a deal to buy 1,030 additional acres, bringing its ownership to nearly 2 square miles of the industrial park that was created as part of a multi-billion effort to bring Foxconn International Holdings to Wisconsin. At the time, it boosted its guaranteed taxable value for the project to $1.4 billion by Jan. 1, 2028.

Most recently, the company received approval in April to begin work on the next phase of the project in a 315-acre site to the west of the current construction area. Site plans for that area show two additional data center buildings and a new electrical substation, all of which will be surrounded by walls to control noise from the buildings.

More: President Biden touts Microsoft’s Racine County ‘comeback project,’ contrasts it with Foxconn failure

From Foxconn uncertainty to optimism

Microsoft’s development has moved far more quickly than was initially expected, putting it in a position to rapidly outgrow Foxconn as the business park’s key tenant.

When the business park was created Foxconn was promising to create billions of dollars in property value at a large-screen LCD manufacturing center that would support 13,000 jobs. That plan quickly unraveled and the company as of the end of 2023 employed about 1,000 people making power converters for rooftop solar installations and data servers.

Foxconn’s agreement with the village requires it to pay property taxes on the equivalent of $1.4 billion in taxable value until the financing district that paid for development of the business park is retired in 2047. Microsoft’s similar pledge relieved the uncertainty about Foxconn’s long-term plans in Wisconsin and ensured the bills would be paid on time or possibly earlier.

The speed with which Microsoft is moving in Mount Pleasant and the increased value of the project makes early retirement of the financing district even more likely.

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