Saudi Arabia is poised to become the GCC’s primary destination for data center investment over the next few years, Fitch Solutions’ research unit BMI said in a recent note. The Kingdom leads in planned data center capacity alongside its neighbor, the UAE — both boasting some 75% of current capacity in the region.

Cheap power and ample land are main drivers

Saudi Arabia’s pitch to become a data center hub is backed in part by the country’s lowelectricity costs — a fraction of the global average — especially from substantial solar plants that power AI data centers, as well as large swaths of available land. An example of the former is the Al Shuaiba solar field, which produces 600 MW of electricity for just over a centper kilowatt-hour — nearly a twentieth of the cost at the UK’s in-the-works Hinkley Point C nuclear power facility.

Specialized chips are also paramount

These chips are made for inference — and that’s exactly what they do: Aramco Digital’s agreement with AI player Groq earlier this year granted the KSA access to hardware specifically designed for inference workloads, the process through which AI draws conclusions from brand-new data. This positioning allows Saudi Arabia to become an inference-as-a-service player, situating it at the floor of AI inference cost.

This drastically reduces the cost of producing one token, the fundamental unit of AI output, at a cost much lower than what customers pay. This could enable Riyadh to become an exporter of these tokens to the world. PIF-backed Humain managed to sell output tokens for approximately half the going market price, Humain CEO Tareq Amin told The Economist.

Could a “data landbridge” put the Saudis ahead?

Red Sea disruption could prompt an overland logistics pivot: The report highlighted that Red Sea disruptions could also be a boon for cities overlooking the Gulf waters, such as Dammam and Dubai, “as data center operators and investors seek alternative routes and stable locations.” Issues in the Red Sea — not least of which involved severed undersea cables from anchor dragging — reveal more enticing potential for interconnecting the Gulf with West Asia, bypassing the Red Sea and Egypt.

A landbridge… for data: The Red Sea’s relative vulnerability and its status as a potential data chokepoint could work in Riyadh’s favor, as it integrates fiber-optic cables into its USD 7 bn Saudi Landbridge project. The project spans 1.5k km of rail, connecting Riyadh, Jeddah, and Dammam, and the primary developer Saudi Railway Company clinched a Carrier Service Provider license earlier this year. This development could potentially allow the company to provide telecommunications infrastructure capacity — such as fiber optics — to licensed individual service providers.

One hurdle to overcome? Water…

Scaling up data center infrastructure necessitates proportional water consumption for cooling purposes, with Saudi Arabia’s data centers reportedly requiring 15 bn liters of water last year. The entire Gulf’s data centers are expected to consume upwards of 426 bn liters of water annually by 2030.

… what are the options? Some analysts have pointed to liquid cooling as a water-conscious method, as it can potentially cut data center water consumption by up to 92%. This method still imposes steep Capex costs, entails piping and other components, and raises concerns over leaks, contamination, and convoluted servicing needs.

That means Saudi needs to figure out a cooling alternative: Saudi data centers with hyperscaling capacity primarily rely on conventional air cooling systems, which typically consume significant amounts of water, Data Center Operations Engineer Abdullah Mahrous told EnterpriseAM. Higher-capacity data centers are more likely to use chillers, which, albeit very efficient in power terms, are water-intensive.

Liquid cooling does not rely on water — it uses a dielectric fluid instead. However, the technique is yet to be employed on a large scale in Egypt or the Gulf states, Mahrous said. This method could entail direct-to-chip or immersion cooling methods.

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