Data Centres Take the Throne as the New Crown Prince of the Middle East
While the United States and China have long been key players in the AI revolution, countries in the Middle East are the new entrants. As U.S. President Donald Trump commenced his three-day tour across Gulf countries, numerous partnerships followed to propel the country’s AI infrastructure and the data centre ecosystem. Saudi Arabia made significant moves, given the country’s sovereign wealth fund, the Public Investment Fund (PIF), which is making large-scale investments in AI. On Monday, the Crown Prince Mohammed bin Salman announced ‘HUMAIN’, a state-backed AI company, under the PIF. HUMAIN is set to provide a range of AI services, infrastructure, cloud capabilities, and advanced AI models in the country. The company plans to offer one of the world’s most powerful multimodal Arabic large language models (LLMs). The company formed multiple partnerships with companies, including a $600 million agreement with NVIDIA to create and construct ‘AI factories’ in the country. It also entered a partnership with Amazon Web Services (AWS), involving over $5 billion in investment to build an ‘AI Zone’—which includes AWS AI infrastructure, servers, semiconductors, and AWS services and applications. Meanwhile, AMD announced an agreement with HUMAIN to invest up to $10 billion over five years to establish 500 megawatts of AI compute capacity across a global network of AMD-based data centres, stretching from Saudi Arabia to the United States. Even Oracle announced a $14 billion investment over the next decade, to expand access to cloud and AI infrastructure. Super Micro Computer, based in the US, has formed a multi-year partnership valued at $20 billion with DataVolt to improve DataVolt’s hyperscale AI infrastructure in Saudi Arabia and the United States. And it isn’t just about Saudi Arabia. OpenAI, the company behind ChatGPT, is ‘considering’ building a new data centre in the United Arab Emirates (UAE), reported Bloomberg. Saudi Arabia and the United States forge a digital partnership uniting top global tech companies to boost the digital economy and position KSA as a leading hub for technology and AI. pic.twitter.com/96MMcpzwfn— وزارة الاتصالات وتقنية المعلومات (@McitGovSa) May 13, 2025 Besides the recent announcements, there’s an exhaustive list of investments made in AI infrastructure and data centres in these Middle Eastern countries over the last few years. Why the Middle East? Middle Eastern countries boast a rapidly growing data centre ecosystem, with its capacity expected to increase from 1 gigawatt in 2025 to 3.3 gigawatts within the next five years, according to a PwC research report. “The Middle East offers unique advantages that make it a prime destination for data centre investments. These advantages include low-cost land, affordable power, attractive connectivity prices, access to capital and favourable foreign policies,” read the report. Also, the Middle Eastern countries have multiple government-backed initiatives that involve investing large amounts of capital into AI to diversify their economies beyond oil. For instance, last year, Saudi Arabia committed $100 billion to AI as part of its ‘Project Transcendence’. The MGX Fund, created by the Abu Dhabi government, is a $100 billion investment initiative for AI. It collaborates with BlackRock, Microsoft, and OpenAI to support AI infrastructure projects worldwide. It also participates in the Stargate Project with OpenAI and Oracle, concentrating on AI data centers and power infrastructure. The PwC report further added that governments across the Middle East are actively fostering a business-friendly environment for data centre investments. The report highlighted the case of Saudi Arabia’s Cloud Computing Special Economic Zone (CCSEZ), which was launched in 2023, offering tax incentives and simplified procedures to draw in foreign investment. By 2030, the CCSEZ will represent 30% of the country’s information and communication technology expenditures. The cost of land is also a crucial factor at play, particularly in Saudi Arabia, which is significantly lower than major global data centre hubs. “Industrial land in Saudi Arabia typically costs $10 to $50 per square metre, compared to $150 to $600 per square metre in US hubs like Northern Virginia,” said the report. Besides, Saudi Arabia and UAE are historically renowned for their abundant energy resources. PwC said that electricity tariffs in these countries range from $0.05 to $0.06 per kWh, well below the US average of $0.09 to $0.15 per kWh. Moreover, creating data centres is beneficial if they can connect to global networks through undersea submarine cable systems, and Middle Eastern countries have several of them, given that most of them lie on coastlines. This is also why Mumbai and Chennai occupy the first two spots in India’s data centre capacity by city, since they are situated on coastlines with vast undersea cable networks. In addition, most of the Gulf countries have always maintained strong international ties and favourable trade relationships with global economic centres. Trump’s visit to the country, which prompted a flood of investments, is a testament to this development. Additionally, reports surfaced that the U.S. President might take a favourable position against AI chip exports to Saudi Arabia, which were subject to restrictions from rules drafted by the previous Joe Biden government. However, cooling systems needed for data centres still remain a challenge. “While the Middle East, with its natural gas reserves and solar potential, is well positioned to address these demands, the region also faces water scarcity, which complicates cooling solutions,” said a Morgan Lewis report from March. The report also added that these countries are exploring solutions that involve innovative cooling technologies, such as seawater-based systems.
American giants like OpenAI, NVIDIA, AMD, AWS, Oracle are investing big on AI infrastructure in Saudi Arabia and UAE.
American giants like OpenAI, NVIDIA, AMD, AWS, Oracle are investing big on AI infrastructure in Saudi Arabia and UAE.
["AI (Artificial Intelligence)", "saudi arabia"]
["Go", "ChatGPT", "OpenAI", "AI", "saudi arabia", "cloud computing", "AWS", "Git", "RAG", "CuPy", "R", "AI (Artificial Intelligence)"]
["AI", "ChatGPT", "OpenAI", "CuPy", "RAG", "cloud computing", "AWS", "R", "Go", "Git"]
Supreeth is an engineering graduate who is curious about the world of artificial intelligence and loves to write stories on how it is solving problems and shaping the future of humanity.