Data Centers in Saudi Arabia: Powering the AI Revolution

  • 30th Apr, 2024
  • Nisha D.
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Data Centers in Saudi Arabia: Powering the AI Revolution

30th Apr, 2024 | Nisha D.

  • Artificial Intelligence
Data Centers in Saudi Arabia

In Saudi Arabia, data centers form the foundation of the country's digital infrastructure and the basis of its technical growth.

Given its investments in digital infrastructure and technical advancement, Saudi Arabia is well-positioned to capitalise on opportunities resulting from the growing need for artificial intelligence (AI) solutions.

This article will explore data center’s crucial role in advancing artificial intelligence.

They supply the essential computing power and storage infrastructure required for the advancement of AI.

The analysis of Saudi Arabia's data centers business indicates an active sector that stimulates important changes and trends.

Significance of Data Centers in the AI Advancement

Saudi Arabia's data centers, which provide the necessary processing power and storage capacity for AI development, support the country's AI revolution.

Advanced AI models consume significantly more electricity, approximately eight times that of conventional servers used for tasks like cloud storage or business email.

Growth is essential, particularly for cloud-based data centers where variable expansion is possible to manage to change artificial intelligence (AI) tasks.

Sensitive data is protected by security methods like intrusion detection systems and encryption, and data security and regulatory compliance are guaranteed by adhering to laws like the Personal Data Protection Law (PDPL).

Furthermore, data centers provide smooth communication and cooperation amongst distributed AI systems by facilitating worldwide connectivity.

Data centers provide the processing power, data storage, scalability, security, and networking capabilities that propel innovation and the AI economy, acting as the fundamental infrastructure for the AI revolution.

Saudi Arabia’s Data Centers Market Analysis

The Saudi Arabian data centers market is projected to grow substantially, with a size estimated at 345.31 Mega Watt in 2024 and expected to reach 854.81 Mega Watt by 2029, demonstrating a strong compound Annual Growth Rate (CAGR) of 19.88% during the forecast period.

Data Centers Market

Let's look at some of the data center market analyses:

1. Market Size

The market is expected to rise rapidly over the next five years, from USD 5,287.09 million in 2024 to USD 13,557.5 million in 2029.

This rise indicates that there are a lot of opportunities in the market, indicating room for growth and development in different types of industries.

2. CAGR

The market's projected compound annual growth rate (CAGR) is expected to rise rapidly from 6.2% in 2017–2023 to an ambitious 20.8% in 2024–2029.

This change denotes a move towards faster growth, which in the later part of the transition may have been driven by developing technology or changing market conditions.

3. Key Metrics

Data centers have grown significantly in the following key metrics:

  • IT load capacity increased from 345.3 MW in 2024 to 855 MW by 2029 due to increased smartphone adoption and mobile advertisement browsing.

  • Total raised floor space increased from 1.38 million sq. ft. in 2024 to 3.4 million sq. ft. by 2029 due to smart city development.

  • Installed racks increased from 69,063 units in 2024 to 170,963 units by 2029, with Riyadh hosting the highest number.

  • 15 DC operators and 39 facilities in 2024 contributed to market growth.

4. Tier Analysis

  • Tier 3 data centers dominate the market share in 2023, with Tier 4 exhibiting the fastest growth.

  • Tier 3 data centers are expected to reach 483.43 MW by 2029, growing at a CAGR of 13.61%.

  • Tier 4 data centers are projected to reach 371.64 MW by 2029, with a CAGR of 18.44%.

  • Tier 3 is anticipated to witness the fastest growth in 2029 due to widespread Tier 3 certification adoption.

Top 5 Data Centers in Saudi Arabia

Saudi Arabia's data center industry expansion is remarkable, pivotal for its technological advancement and economic diversification. Let's explore top data centers initiatives:

1. Riyadh Cloud Data Center

Oracle's investment of USD 1.5 billion includes a new cloud region in Riyadh, supplementing existing centers.

2. Jeddah Data Center

Damac and Cinturion collaborate on a 30 MW facility, part of a USD 1 billion strategy.

3. NEOM Telecommunications Center

TONOMUS inaugurates a USD 500 million center, enhancing 5G and cloud services in NEOM.

4. Dammam Data Center Expansion

MIS invests USD 414.43 million to boost capacity, part of a larger USD 2.6 billion plan.

5. NEOM Data Center

STC and Arabian Internet and Communications Services Co. build a cutting-edge center in NEOM City, supporting digital solutions.

The surge in data center projects across Saudi Arabia underscores the nation's commitment to technological advancement and economic expansion.

These efforts are key in positioning Saudi Arabia as a regional leader in the digital domain, fueled by substantial investments from both domestic and international markets.

Trends Shaping the Data Centers Market in Saudi Arabia

The revolution in the data centers market is at the heart of Saudi Arabia's technological progress.

Several significant trends contribute to this shift and changing the digital infrastructure landscape in the whole country, including:

1. 5G Extension

  • Expanding into the field of connectivity, the extensive expansion of 5G coverage is transforming the flow of mobile data.

  • It is impossible to minimise the significance of this growth, given that the average smartphone's data usage is expected to increase from 5.5 GB in 2023 to a whopping 18.7 GB by 2029.

  • About twenty-three per cent of all data volume in the country is currently attributable to 5G gear, there will be 51 places with 5G connections nationwide, up from seven more cities and provinces.

2. The Internet of Things Revolution

  • IoT (Internet of Things) age, where thousands of IoT devices are being installed across many sectors in Saudi Arabia.

  • IoT is expanding, with wearables supporting e-health programs, advanced logistics inventory trackers, and pollution monitoring systems among its offerings.

  • In the upcoming years, IoT adoption is expected to accelerate quickly, indicating a greater need for reliable data centers infrastructure to serve these emerging ecosystems.

3. Smartphone Innovation

  • As Saudi Arabia's smartphone market experiences a notable expansion, immerse yourself in the world of mobile technology.

  • Smartphone use rates are surging, driven by developments in 5G connectivity and an endless number of digital projects and e-commerce ventures.

4. Economic Growth

  • Saudi Arabia's strong GDP growth of 8.8% in 2022 is increasing consumer purchasing power.

  • With smartphone users consuming more digital advertising than ever before, the country's economic prosperity offers a lot of potential for data consumption and digital marketing initiatives.

Smarphone Users- Data Centers

Development and Investment in Saudi Arabia's Data Centers

Saudi Arabia is rapidly developing its data centers facilities to take the lead in the AI market.

Saudi Arabia is investing considerably in high-performance Nvidia chips, which is helping the country make significant advancements in artificial intelligence (AI).

Large language models (LLMs) and other AI applications are developed using these processors, which are essential for creating sophisticated AI software.

Let's look at some of the investments made by Saudi Arabia in AI Data centers:

1. AI Chips Investments in Saudi Arabia

  • Saudi Arabia is actively investing in AI chips to enhance its technological capabilities, in addition to developments in data centers and infrastructure.

  • The country's dedication to improving its AI capabilities can be seen in the acquisition of about 3,000 Nvidia H100 chips by King Abdullah University of Science and Technology (KAUST).

  • These $40,000 chips are specifically designed for generative AI activities, which are essential for creating complex AI models.

  • Aiming to establish the kingdom as a leader in AI research and innovation, Saudi Arabia's ambitious ambitions also include the construction of the Shaheen III supercomputer, which will be outfitted with Nvidia's Grace Hopper CPUs.

2. Focusing Ability, New Businesses, and Investment

  • Attracting investors, supporting businesses, and developing a trained workforce to propel AI innovation are essential components of Saudi Arabia's Vision 2030.

  • The country is actively looking for talent and investment from abroad and is providing advantages for businesses to set up shop in its rapidly expanding technology sector.

  • Saudi Arabia wants to become an innovation hub in the region and accelerate its AI capabilities by encouraging collaboration between local and international partners.

Conclusion

In conclusion, Saudi Arabia's data centers are essential to the country's goal of driving innovation and the AI revolution.

These data centers are the foundation of the country's digital infrastructure, going beyond traditional processing and storage.

Saudi Arabia is ideally positioned to take advantage of customers in this quickly expanding sector because of its capacity to handle AI applications.

Through a growing data center sector and a dedication to innovation, the nation has the potential to fulfil the growing need for artificial intelligence (AI) solutions and maintain its leadership position in the global technology sector.

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