Tom Still: Why has Microsoft picked Wisconsin for its AI data center? Just ask AI (2024)

The question on the minds of many people now that Microsoft has decided to invest $3.3 billion in an artificial intelligence data center in Racine County is “why Wisconsin?” versus the West or East coasts or overseas.

The short answer: Microsoft leaders, who are familiar with the state, see it as the kind of place where AI innovations in manufacturing can be put to work quickly and with a solid return on investment.

Year after year, Wisconsin ranks either No. 1 or No. 2 in the percentage of its workforce engaged in manufacturing, often swapping places with Indiana. In fact, when I asked ChatGPT4 what industry sectors in Wisconsin are best positioned to benefit from AI, here’s what came back: food and beverage processing, industrial machinery and equipment, automotive components, medical devices and equipment, chemicals and plastics, paper products and electronics and electrical equipment.

“If you put this data center almost anywhere else in the country, I’m not sure there would nearly the potential return,” said Buckley Brinkman, who leads the Wisconsin Center of Manufacturing and Productivity and who has been an advocate for state industries large and small to adopt the new technology.

The reasons are simple enough: AI can help Wisconsin manufacturers be more efficient and productive; better predict maintenance downtime; optimize supply chains; and control quality. Its predictive properties can help reduce energy use and waste on the front end and avoid costly mistakes or down time on the back end.

“AI is going to be transformational,” Brinkman said. “It’s all about making products that can be competitive around the world. Plus, it’s building on a strength that Wisconsin has ... our manufacturing sector and the practical streak of the people who are behind it.”

For those who were initially excited (present company included) when Foxconn announced plans in 2017 to invest $10 billion in a flat-panel screen manufacturing plant in Racine County, Wednesday’s Microsoft unveiling could be viewed with skepticism.

There are some major differences, however, starting with the fact that Microsoft appears committed to under-promising and over-delivering. Foxconn’s predictions of up to 13,000 jobs came right out of the gate, while Microsoft has built on a March 2023 announcement of 460 jobs on a much smaller footprint. What was initially a 315-acre site is now 1,345 acres with a total investment of $226 million in real estate alone, much of which is already shovel-ready.

There are other reasons to believe Microsoft will follow through. For starters, company president Brad Smith and Satya Nadella, its chairman and chief executive officer, both have Wisconsin ties. Smith was born and grew up in Wisconsin; Nadella holds a degree from UW-Milwaukee.

The company is also the leading partner in TitletownTech, a venture capital firm formed out of a partnership between the Green Bay Packers and Microsoft. It has invested in startups and done a lot to accelerate their development, particularly in Green Bay.

Microsoft appears much more willing than Foxconn to put its faith in other Wisconsin resources that can help to make the whole project work. That includes an AI co-innovation laboratory at UW-Milwaukee, a training agreement with Gateway Technical College in southeastern Wisconsin, and a relationship with gener8tor, a Wisconsin-born accelerator with locations nationwide and beyond.

Finally, the indigenous feel surrounding the project is helped by its location, which is adjacent to Interstate 94 in what I have long called the “I-Q Corridor,” with the “I” standing for interstate, innovation and the “Q” suggesting quality. There is every reason for Microsoft to be a part of a corridor that runs south to Chicago and north and west to Green Bay, the Fox Valley and Madison.

Did the announcement come in a political year in a swing state? Of course. There will be those who have their doubts based on those circ*mstances alone. However, in a world where artificial intelligence has already burst onto the scene, the Microsoft data center is much more about right time and right place.