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A sign opposing a zoning change for a Microsoft data center appears in Caledonia, Wisconsin, on Sept. 19, 2025. Jordan Novet | CNBC
The village of Caledonia, Wisconsin, sandwiched between Chicago and Milwaukee along Lake Michigan, is dotted with corn and soybean fields, single-story homes and traffic signs alerting drivers to horseback riders. In September, when Microsoft , the world's third most-valuable company, sought to rezone 244 acres of agricultural land for a data center, 40 of the 49 people who spoke before the village's planning commission opposed the plan. They worried about noise. They said air quality, already in violation of federal standards, could worsen. They feared electric bills might inflate and that few jobs would materialize, while Microsoft would continue to reap the rewards of the artificial intelligence boom. "Why do we have to subsidize a company making billions of dollars a year?" resident Mike Kirchner asked at the meeting. Nine days later, before Caledonia's top officials could vote on the proposal, Microsoft walked away. It pledged to find another location in the region, while expanding a separate AI data center 20 miles south, in the village of Mount Pleasant, where public outcry was proving to be less of an impediment. Caledonia and Mount Pleasant both belong to Racine County, which consists of 18 small cities, towns and villages in the southeastern corner of Wisconsin. The two villages have very different dynamics. Half a decade ago, Mount Pleasant was supposed to be home to a giant facility for Taiwanese iPhone supplier Foxconn. It was a project with such ambitions that President Donald Trump, during his first administration, called it "the eighth wonder of the world" at a 2018 groundbreaking ceremony. To clear the way for Foxconn, Mount Pleasant bought land, offering $50,000 an acre and 140% of appraised value for residents' homes, plus relocation costs, a village official said. Roads were paved, and water connections and electrical infrastructure installed. But it was ultimately a high-priced failure. Foxconn eventually abandoned most of its plans, leaving a giant hole in the 800-plus acres of land that had been transferred to the manufacturer. In the eyes of many locals, Microsoft is filling that hole, and then some.
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The contrasting scenarios in two Wisconsin villages, separated by mostly farmland and a smattering of churches and gas stations, underscores the obstacles facing the tech industry as it seeks to construct supersized data centers to house what's expected to be trillions of dollars worth of AI infrastructure. While large technology companies have maintained data centers in the U.S. for decades, there's a fresh urgency to open facilities packed with hundreds of thousands of Nvidia chips and to cash in on the AI craze, spawned by the 2022 launch of OpenAI's ChatGPT. Power requirements measured in the gigawatts, pollution concerns, economic issues and political dynamics are just some of the friction points that can vary dramatically from one municipality to the next, making it virtually impossible to create a playbook for the handful of companies — Microsoft, Amazon , Google and Meta — leading the way. Meanwhile, data centers don't tend to create a lot of long-lasting jobs. Brad Smith, Microsoft's vice chair and president, wrote in a blog post in September that the Mount Pleasant facility hired 3,000 construction workers at its peak and foresees 500 full-time employees, eventually growing to 800. McKinsey said in an August report that a 250,000-square-foot data center could employ 1,500 people during construction, but more than 50 for "steady-state operations," though additional jobs get created for other labor, like upgrading infrastructure. Local pushback can present a major hurdle. In August, the city council in Tucson, Arizona, voted to shelve an unnamed party's 290-acre data center proposal following objections from residents. In September, Google scrapped plans for a 470-acre site to be located in Indiana after protestors mounted signs that read "NO GOOGLE DATA CENTER," and voiced concerns about strains on the power grid and loss of farmland. A month later, in its quarterly earnings report, Google parent Alphabet raised its capital expenditures forecast, saying it now expects to spend up to $93 billion in 2025 followed by a "significant increase" next year. Microsoft said that same day that capex growth would accelerate in fiscal 2026, which started in July, suggesting a minimum of about $94 billion, a number that's substantially higher when including leases. With all of the hyperscalers are laying out aggressive spending plans, Wisconsin and other states have lined up to offer incentives, such as extending tax breaks on sales of servers and networking switches. That partly reflects an effort to reestablish domestic industries after decades of economic erosion from the closing of factories and the rise of offshoring. Wisconsin, once a hub for building auto parts and heavy equipment, has 22% fewer people working in manufacturing today than it did at the end of the 20th century, according to the Bureau of Labor Statistics. In 2010, Chrysler closed its plant in Kenosha, just south of Caledonia. A data center doesn't promise the kind of jobs needed for a vehicle production line, but it represents a connection to an emerging part of the economy and can offer hope to areas that have long been on the decline. "The jobs Microsoft is paying are notably higher than the average wage in the region," said Dale Kooyenga, CEO of the Metropolitan Milwaukee Association of Commerce. It's a pitch that was enticing enough for one village in Racine County, but not another.
Filling the hole
The story starts in 2017, when Foxconn said it would build a $10 billion plant in Mount Pleasant for making flat-panel displays, with plans to create 13,000 jobs. Mount Pleasant and Racine County told media outlets they were committing $764 million. Kelly Gallaher, Racine County's Democratic party chair, said borrowings approached $1 billion. "For a town of 26,000 people, that's crazy, right?" she said in an interview. By mid-2018, Foxconn was already scaling back its plans, first by deciding not to proceed with a "Generation 10.5" factory that could churn out screens of up to 75 inches in size, and instead targeting smaller components.
The entrance to a Foxconn construction site in Mount Pleasant, Wisconsin, in May 2019. Katie Tarasov | CNBC
The company quickly downsized its hiring projections. Development was so slow that Bloomberg described the project as "disastrous" in 2019. An amended contract signed in 2021 allowed for up to $80 million in state tax credits, down from the original $2.85 billion, in the event that Foxconn reached its new job creation goal of 1,454 by 2026. In 2023, the company said, it employed over 1,000 people in Wisconsin. Mount Pleasant's finances sagged under the pressure of the development. Between 2019 and 2022, the village lost $193 million to pay down debt for the project, as costs far outpaced tax revenue from Foxconn, according to financial reports. And the city of Racine, which supplies water to the village, wasn't getting much economic activity in return, leading to a legal skirmish between the municipalities. Then came the AI blitz. OpenAI released ChatGPT in November 2022. The chatbot took off immediately and set in motion a torrent of investment in generative AI. Microsoft, OpenAI's lead backer and dealer of computing power, needed more capacity. In addition to enlisting third-party providers like CoreWeave , Microsoft sought out land. The company found Mount Pleasant, and in 2023 revealed plans for a 315-acre campus. In May 2024, President Joe Biden visited Wisconsin to promote the home of the planned $3.3 billion data center. Microsoft's Smith, who spent some of his childhood in Mount Pleasant, said the facility would create manufacturing jobs around the state. And while it wouldn't bring 13,000 jobs, as Foxconn had promised, Smith said, "We will train over 100,000 people in Wisconsin by the end of the decade so they have the AI skills to fill the jobs of tomorrow." Microsoft's arrival was "kind of a bit of a silver lining in what was basically a shameful story," Gallaher said. In 2023, Gallaher had mounted a campaign to try and unseat Dave DeGroot as Mount Pleasant village board president, blaming incumbents for the Foxconn misadventure. But in the election that April, a week after Microsoft's announcement, DeGroot was victorious. He didn't respond to a request for comment.
Microsoft President Brad Smith speaks to guests prior to the arrival of President Joe Biden during an event at Gateway Technical College in Sturtevant, Wisconsin, on May 8, 2024. Scott Olson | Getty Images
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