n recent years, Saudi Arabia and the United Arab Emirates (UAE) have competed to become the technological superpower of the Gulf. At the center of this competition is Artificial Intelligence (AI), with both sides making significant multi–billion dollar investments in digital infrastructures, particularly in data centers.
The UAE and Saudi Arabia are heavily investing in data center infrastructure. Saudi Arabia is experiencing rapid growth in this sector, while the UAE has been an early adopter in the Gulf region. The main driver behind this competition is the rise of the AI market, which is expected to expand significantly by 2030. However, there is also a political motivation behind these multi–billion dollar investments. Both countries aim to have a say in regional and global AI policy making processes.
Data centers play a crucial role in the development of AI as they store, process, and transfer data globally. Saudi Arabia, the UAE, and other Gulf countries are well positioned for these infrastructures due to their significant energy supply and financial resources. According to a report by DC Byte, the current data center capacities in Saudi Arabia and the UAE are approximately 123 megawatts and 235 megawatts, respectively, lower than those of many European countries.
Saudi Arabia is currently the fastest–growing data center market, with a projected total capacity of 854 megawatts by 2029. In March 2024, the country signed a $5.3 billion deal with Amazon Web Services to launch a project starting in 2026 aimed at creating a comprehensive, in-country data center infrastructure. Similar investments came from other companies, including Datavolt, which pledged $5 billion for data centers with a combined 300 megawatts capacity, and the U.S.–based ServiceNow, which plans to invest $500 million to build two data centers.
On the other hand, the UAE stands as the largest data center hub in the Gulf region, housing 38 facilities. The country initiated the construction of these facilities two decades ago through the Dubai Internet City project. Khazna Data Centres, the AI company G42 data center unit, is this sector's largest regional player, owning 12 infrastructures in the UAE. In September of last year, the UAE's Ministry of Communications and Information Technology committed to additional investments in data centers and renewable energy, amounting to $18 billion by 2030. Furthermore, OpenAI's Sam Altman has recently engaged with the country's policymakers and investors to explore the establishment of AI infrastructure.
Economic hegemony is the first reason behind the Saudi Arabia/UAE AI rivalry, which is often downplayed publicly by the countries' officials. The GCC data center market is expected to almost double from $2.45 billion in 2021 to $4.23 billion by 2026. More specifically, AI will contribute about $135 billion to Saudi Arabia's economy and $96 billion to the UAE by 2030. This is why both countries see this sector as a crucial component of their economic development programs, such as Saudi Vision 2030 and Abu Dhabi Economic Vision 2030,
Building and hosting data centers also has political reasons, such as avoiding foreign meddling and imposing regulations. The UAE has understood this sector's potential and has embarked on a process of building data centers outside its borders. In May of this year, it signed a memorandum with Uzbekistan to build digital infrastructures, including data centers, similar to another signed between G42 and Kenya representatives in the same month. Saudi Arabia and the UAE's final goal is to influence regional and global AI policy making.
Despite the growing enthusiasm for these infrastructures, the Gulf is currently facing significant issues. First, there is a shortage of qualified workforce in the field, including facility managers and mechanical engineers. This is why the $5.3 billion Saudi Arabia–Amazon deal included training programs for the local population. Second, the high temperatures in the Gulf may cause potential outages and breakdowns in the facilities, leading to high cooling costs. Lastly, the regulatory environment for data protection in GCC countries is evolving rapidly, requiring companies to make considerable efforts to comply with changing regulations.
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Saudi Arabia and UAE's race for AI, data center dominance
Photo by Lightsaber Collection on Unsplash.
July 30, 2024
The UAE and Saudi Arabia are heavily investing in data center infrastructure, and the emerging rivalry is for both economic and political reasons, writes Elia Preto Martini.
I
n recent years, Saudi Arabia and the United Arab Emirates (UAE) have competed to become the technological superpower of the Gulf. At the center of this competition is Artificial Intelligence (AI), with both sides making significant multi–billion dollar investments in digital infrastructures, particularly in data centers.
The UAE and Saudi Arabia are heavily investing in data center infrastructure. Saudi Arabia is experiencing rapid growth in this sector, while the UAE has been an early adopter in the Gulf region. The main driver behind this competition is the rise of the AI market, which is expected to expand significantly by 2030. However, there is also a political motivation behind these multi–billion dollar investments. Both countries aim to have a say in regional and global AI policy making processes.
Data centers play a crucial role in the development of AI as they store, process, and transfer data globally. Saudi Arabia, the UAE, and other Gulf countries are well positioned for these infrastructures due to their significant energy supply and financial resources. According to a report by DC Byte, the current data center capacities in Saudi Arabia and the UAE are approximately 123 megawatts and 235 megawatts, respectively, lower than those of many European countries.
Saudi Arabia is currently the fastest–growing data center market, with a projected total capacity of 854 megawatts by 2029. In March 2024, the country signed a $5.3 billion deal with Amazon Web Services to launch a project starting in 2026 aimed at creating a comprehensive, in-country data center infrastructure. Similar investments came from other companies, including Datavolt, which pledged $5 billion for data centers with a combined 300 megawatts capacity, and the U.S.–based ServiceNow, which plans to invest $500 million to build two data centers.
On the other hand, the UAE stands as the largest data center hub in the Gulf region, housing 38 facilities. The country initiated the construction of these facilities two decades ago through the Dubai Internet City project. Khazna Data Centres, the AI company G42 data center unit, is this sector's largest regional player, owning 12 infrastructures in the UAE. In September of last year, the UAE's Ministry of Communications and Information Technology committed to additional investments in data centers and renewable energy, amounting to $18 billion by 2030. Furthermore, OpenAI's Sam Altman has recently engaged with the country's policymakers and investors to explore the establishment of AI infrastructure.
Economic hegemony is the first reason behind the Saudi Arabia/UAE AI rivalry, which is often downplayed publicly by the countries' officials. The GCC data center market is expected to almost double from $2.45 billion in 2021 to $4.23 billion by 2026. More specifically, AI will contribute about $135 billion to Saudi Arabia's economy and $96 billion to the UAE by 2030. This is why both countries see this sector as a crucial component of their economic development programs, such as Saudi Vision 2030 and Abu Dhabi Economic Vision 2030,
Building and hosting data centers also has political reasons, such as avoiding foreign meddling and imposing regulations. The UAE has understood this sector's potential and has embarked on a process of building data centers outside its borders. In May of this year, it signed a memorandum with Uzbekistan to build digital infrastructures, including data centers, similar to another signed between G42 and Kenya representatives in the same month. Saudi Arabia and the UAE's final goal is to influence regional and global AI policy making.
Despite the growing enthusiasm for these infrastructures, the Gulf is currently facing significant issues. First, there is a shortage of qualified workforce in the field, including facility managers and mechanical engineers. This is why the $5.3 billion Saudi Arabia–Amazon deal included training programs for the local population. Second, the high temperatures in the Gulf may cause potential outages and breakdowns in the facilities, leading to high cooling costs. Lastly, the regulatory environment for data protection in GCC countries is evolving rapidly, requiring companies to make considerable efforts to comply with changing regulations.
