RIYADH: Saudi Arabia’s deserts are fast becoming the new frontier for hyperscale data centers, offering vast land, natural resilience, and strategic positioning that traditional global tech hubs struggle to match.
The Kingdom’s geologically stable terrain faces little risk from earthquakes or flooding, making it an ideal base for mission-critical digital infrastructure. Market revenue is projected to reach $2.07 billion in 2025 and expand to $2.83 billion by 2030, growing annually at 6.45 percent, according to Statista.
Turki Badhris, president of Microsoft Arabia, said the desert landscape provides a rare opportunity to build at scale without the limitations of legacy infrastructure.
Turki Badhris, president of Microsoft Arabia. Supplied
“Unlike traditional global tech hubs, the Kingdom’s open terrain allows for purpose-built facilities with fully independent power, cooling, and networking systems. This kind of scale and flexibility is challenging to achieve in crowded global tech hubs,” Badhris said.
Fady Chalhoub, partner at PwC Middle East, noted that hubs such as Singapore and Zurich face constraints from land scarcity, high real estate costs, and strict regulations. By contrast, Saudi Arabia combines affordable land with state-backed investment in subsea and terrestrial fiber routes linking Europe, Asia, and Africa.
“This combination of low-risk geography, strategic location, and government-backed infrastructure development presents a compelling value proposition for hyperscale providers seeking to expand beyond traditional hubs,” he said.
Houssem Jemili, consultant at Bain & Co. (Supplied)
Houssem Jemili, consultant at Bain & Co., added that abundant land, ultra-low-cost solar power, and a dry climate suitable for passive cooling strengthen the Kingdom’s appeal. Government support, he said, “provides financial incentives, infrastructure, and regulatory ease,” while proximity to subsea cables enhances global connectivity.
Energy and innovation advantage
The Kingdom is also leveraging renewables to power its data economy. Chalhoub emphasized the role of solar and green hydrogen in cutting emissions and lowering operating costs. He said despite extreme heat, the region’s low humidity makes advanced cooling techniques viable.
“Solutions such as liquid and immersion cooling, including direct-to-chip technologies, are increasingly viable in this environment, supported by the availability of land, progressive regulation, and an innovation-friendly policy landscape,” he said.
He added: “Saudi Arabia is prioritizing the development of dedicated digital zones and infrastructure corridors,” enabling campuses tailored for AI, cloud, and quantum technologies.
Jemili pointed to the Kingdom’s intense solar irradiance as a source of ultra-cheap renewable power. The dry climate, he said, is driving the adoption of water-saving cooling systems, while land availability supports hyperscale campuses at lower real estate costs.
He noted that megaprojects such as Neom’s Public Investment Fund–backed AI data center campus show how Saudi Arabia is integrating digital infrastructure into broader smart city plans. With new subsea cables strengthening its global links, the Kingdom is emerging as a “tri-continental data hub,” Jemili said.
Regional competition
Saudi Arabia is not alone in this race. The UAE has poured investment into AI-focused data centers, while Qatar has launched national cloud initiatives. But Saudi Arabia’s scale, low energy costs, and government funding set it apart.
According to PwC, regional data capacity is set to triple — from 1 GW in 2025 to 3.3 GW within five years — fueled by surging demand for cloud computing and AI. GCC states, led by Saudi Arabia, are driving this transformation through initiatives like the PIF-backed Transcendence AI Initiative and Amazon Web Services’ $5.3 billion investment.
Cost dynamics add to the edge. Industrial land in Saudi Arabia ranges between $10 and $50 per sq. meter, compared with $150 to $600 in US hubs such as Northern Virginia. Power tariffs are also lower — $0.05 to $0.06 per kWh in Saudi Arabia and the UAE versus $0.09 to $0.15 in the US.
Meanwhile, submarine cable projects including 2Africa, SMW6, and Gulf Gateway (GGC1) are reinforcing Saudi Arabia’s connectivity with Europe, Asia, and Africa, underpinning competitive pricing.
Vision 2030 push
Hyperscale data centers are central to Saudi Arabia’s Vision 2030, drawing global players such as Oracle, Google, Microsoft, and Amazon while boosting local capacity and economic diversification.
Badhris said Microsoft’s Azure cloud region was “equally about supporting the Kingdom’s broader digital ambitions under Vision 2030.
“By enabling digital transformation, creating high-value jobs, and driving innovation across industries, we are contributing to the Kingdom’s economic diversification goals,” he said. The initiative aims to generate up to $24 billion in value over four years and train more than 100,000 Saudis in cloud and AI skills by 2025.
Chalhoub noted that hyperscale infrastructure stimulates demand for AI, cloud, and cybersecurity expertise, strengthens data sovereignty, and supports startups.
“Ultimately, hyperscale datacenters are more than technical infrastructure,” he said. “They are foundational enablers of Saudi Arabia’s aspirations for a knowledge-based economy, sustainable innovation, and industrial self-sufficiency.”
Jemili pointed to global momentum, citing Oracle’s $14 billion pledge and Equinix’s $1 billion Jeddah investment.
“Also, the Saudi Digital economy is expected to benefit: the data center market will triple to $3.9 billion by 2030, reflecting rising cloud and AI demand. Lastly, the data centers will support PIF’s digital initiatives such as Neom’s $5 billion net-zero AI hub,” he said.
