meed-logo

line1 line2 line3
SIGN IN / REGISTER

AI chip restriction may slow down GCC data centre boom

20 January 2025

Commentary
Jennifer Aguinaldo
Energy & technology editor

A US regulation restricting access to US-made integrated circuits (chips) designed for advanced artificial intelligence (AI) applications could slow down ongoing plans to build substantial data centre capacity in the GCC states.

According to a senior executive with a data centre operator, there are currently no viable alternative suppliers for advanced graphics processing units (GPUs) apart from the US.

“China is roughly two years behind the US in terms of these technologies,” the source told MEED. “There is no doubt China can adapt and improve their technology pace rapidly, but there is still a significant lag.” 

GPUs are crucial to building hyperscale data centres catering to advanced AI applications.

Their lack of availability could impede some GCC states’ momentum to build massive data centre facilities over the next few years as part of their national economic diversification and AI strategies.

Chips exports

In December, the US government approved the export of advanced AI chips to a Microsoft-operated facility in the UAE as part of the company’s partnership with UAE-based AI firm G42, according to US-based news website Axios.

The report did not specify the volume of chips approved for export to the UAE.

This followed an announcement in April 2024 that Microsoft had agreed to invest $1.5bn in G42.

At the time, the companies said the investment would bring the latest Microsoft AI technologies and skilling initiatives to the UAE and other countries in the Middle East, Central Asia and Africa, with Brad Smith, vice chair and president of Microsoft, joining the G42 board of directors.

In September last year, the Saudi Data and Artificial Intelligence Authority (SDAIA) and US-headquartered AI microprocessor giant Nvidia confirmed a plan to establish “the largest high-performance data centre infrastructure in the Middle East and North Africa region” in Saudi Arabia.

The project will expand SDAIA’s existing supercomputing infrastructure in Riyadh. The planned expansion is expected to integrate Nvidia’s most advanced technologies, including the upcoming Nvidia Blackwell architecture, and eventually grow to over 5,000 GPUs.

AI as part of US defence strategy 

The White House issued a brief on the final draft of the regulation on 13 January, a few days before President Joe Biden’s departure and President-elect Donald Trump’s inauguration.

The regulation is designed to restrict access to powerful GPUs, presumably to prevent third countries from inadvertently passing on or re-exporting these devices to China, given their ongoing power race over AI.

Seen by some experts as essentially including AI in the US defence strategy, the regulation creates three tiers of countries in terms of access to these chips.

The first tier comprises 18 countries that can buy GPU chips without limits. These are Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, the Republic of Korea, Spain, Sweden, Taiwan and the UK.

The third tier comprises countries of concern, including Macau (China) and Russia, according to some reports.

All other nations and states, including those in the GCC, are presumed to be mid-tier countries, where a cap of approximately 50,000 GPUs between 2025 and 2027 will apply.

Individual companies from these countries will be able to achieve higher computing capability if they comply with US regulations and obtain validated end user (VEU) status.

Data centre construction boom

Some GCC states, including the UAE, Saudi Arabia and Qatar, have a booming data centre market, thanks to their governments’ drive to set up regional AI hubs, increase digital adoption and improve efficiencies in line with their economic diversification agendas. 

The Middle East data centre construction market is projected to reach $4.39bn by 2029, growing at a compound annual growth rate of 10.99%. 

According to GlobalData, total investment in data centres globally reached $70.6bn in 2024 and is projected to grow by 5% to $74.3bn in 2025.

Photo credit: Pixabay (for illustrative purposes only)

https://image.digitalinsightresearch.in/uploads/NewsArticle/13303269/main.jpg
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Dubai approves metro extension to Al-Maktoum airport

    10 November 2026

    Dubai’s Executive Council has approved a project to extend the Dubai Metro’s Route 2020 to Al-Maktoum International Airport City, with passenger services scheduled to begin operations in 2031.

    Sheikh Hamdan bin Mohammed bin Rashid Al-Maktoum, Crown Prince of Dubai, announced the decision following a council meeting held during the UAE Government Annual Meetings 2026.

    The rail project forms part of a package of strategic schemes worth over AED11bn ($3bn) approved by the council.

    The wider approvals include a comprehensive framework to upgrade community facilities and public services by 2040, with priority given to residential communities for UAE citizens.

    The project approval follows the procurement of detailed design work for the rail link. MEED exclusively reported in September that Dubai’s Roads & Transport Authority (RTA) had awarded US-based engineering consultancy Aecom the design contract for the Route 2020 extension.

    The planned extension will run for about 3 kilometres from the existing Expo 2020 terminus station to connect directly with the West Terminal of Al-Maktoum International airport. The scheme will add two new stations to the network.

    The existing Route 2020 corridor is a 15km spur that branches off the Dubai Metro Red Line at Jebel Ali station. It comprises 11.8km of elevated viaduct and 3.2km of underground track, serving five elevated and two underground stations.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21301168/main.png
    Yasir Iqbal
  • Egypt seeks to accelerate gas pipeline project with Libya

    10 November 2026

    Egypt aims to accelerate a range of energy projects with Libya, including gas pipeline links, according to a statement from the Egyptian Foreign Minister Badr Abdelatty.

    Other projects include a scheme to refine Libyan crude in Egypt and an electricity interconnection.

    Abdelatty’s comments came in a ministry statement after a meeting with Libya’s acting oil and gas minister, Khalifa Abdulsadek, in the Libyan capital of Tripoli.

    Egypt is currently trying to address an energy squeeze that has escalated ​due to elevated global liquefied natural gas (LNG) prices since the ​start of the US-Israeli war on Iran in February of this year.

    In his statement, Abdelatty called ‌for ⁠cooperation on petroleum products and the completion of projects to refine Libyan oil in Egypt and re-export ​it.

    He also said that Abdulsadek would ​visit ⁠Cairo soon to continue technical talks with Egypt’s petroleum and electricity ministers.

    The ⁠statement ​did not provide ​details on costs or the status of the projects.

    Plans for new gas pipeline links with Libya are just one of several ambitious gas pipeline plans Egypt is pursuing.

    In October, the Italian oil and gas company Eni signed the main engineering, procurement, construction and drilling contracts for a project to export gas from reserves in Cyprus using a major pipeline to Egypt.

    The project includes contracts with several companies that will develop infrastructure in both Egypt and Cyprus.

    The awards included a $170m contract won by Egypt’s Petrojet for a new onshore gas pipeline in Egypt that will help transport gas to Egypt’s Damietta LNG facility.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21273777/main.jpg
    Wil Crisp
  • Omani company signs Kuwait drilling contract

    10 November 2026

    Oman’s MBPS has signed a drilling rig contract worth $127.3m with state-owned upstream operator Kuwait Oil Company (KOC).

    Under the terms of the deal, MBPS will supply and operate three newly built 1,000-horsepower land rigs for drilling and workover operations, according to a company statement.

    The UAE-based oil field services company Adnoc Drilling is a majority shareholder in MBPS.

    The chief executive of MBPS, Salim Al-Harthy, said: “This is another important milestone for MBPS and a strong reflection of KOC’s confidence in our capabilities.

    “It further strengthens our presence in Kuwait and our commitment to delivering safe, reliable and efficient drilling and workover services across the region.”

    He : “My sincere appreciation to KOC for their continued trust, and to our MBPS team for their hard work and dedication in making this possible.”

    In October last year, KOC said it planned to spend KD1.2bn ($3.92bn) on its exploration drilling programme through 2030.

    The spending was part of a KD9.8bn budget, the company’s biggest ever, allocated for drilling and maintenance of up to 6,193 wells by the end of this decade.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21273731/main.png
    Wil Crisp
  • Adnoc Drilling wins $315m Kuwait offshore rig deals

    10 November 2026

    Register for MEED’s 14-day trial access 

    Abu Dhabi National Oil Company (Adnoc Group) subsidiary, Adnoc Drilling, has been selected for two offshore drilling rig contracts in Kuwait with a combined maximum value of KD96.55m ($315m), according to documents published by Kuwait’s Official Gazette.

    The Higher Purchasing Committee of state-owned Kuwait Petroleum Corporation (KPC) has given approval for its subsidiary Kuwait Oil Company (KOC) to award the contracts to the Abu Dhabi-listed drilling contractor after Adnoc Drilling submitted the lowest compliant bids.

    While the maximum combined contract value has been confirmed as KD96.55m ($315m), the individual contract values, rig identities, durations and expected commencement dates have not been disclosed.

    The approval comes as Kuwait moves to expand offshore exploration and development following a series of discoveries in its territorial waters.

    It is currently unclear how Kuwait will provide security for its planned offshore oil and gas projects in the Gulf, adding uncertainty to the outlook for these plans.

    On 5 October, KPC chief executive Shaikh Nawaf Al-Sabah reiterated the company’s commitment to developing three major offshore oil discoveries in the region.

    KPC initially launched the Al-Seef project to develop the three fields in February, just weeks before the US and Israel attacked Iran, triggering a regional war that has sparked a crisis in Kuwait’s oil and gas sector.

    The regional conflict has seriously disrupted shipping through the Strait of Hormuz, a key export route for Kuwaiti oil.

    The war has also led to dozens of attacks on Kuwaiti oil and gas infrastructure, with at least one causing damage to a Kuwaiti offshore platform.

    This attack took place on 12 July, when a drone struck a KOC offshore drilling platform in Kuwaiti territorial waters, causing damage to the platform and injuring one worker.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21273678/main2430.jpg
    Wil Crisp
  • Aramco-backed firm tenders logistics hub expansion

    9 November 2026

     

    Asmo, the logistics joint venture of Saudi Aramco and DHL Supply Chain, has set a 15 November deadline for a contract to expand the logistics complex at King Salman Energy Park (Spark) in Saudi Arabia’s Eastern Province.

    The logistics hub will add over 124,000 square metres (sq m) at Spark.

    Al-Khobar-based engineering firm House of Consulting Office is the project consultant.

    The tender for the expansion works comes shortly after Asmo awarded an estimated SR820m ($218m) contract to build the logistics complex’s first phase in May this year.

    The overall project will feature a 43,000 sq m, temperature-controlled Grade A warehouse; more than 3,000 sq m of offices and staff amenities; 5,300 sq m dedicated to chemicals storage; and an open yard covering about 1.2 million sq m.

    Asmo signed an agreement with Bahrain‑headquartered Arcapita Group Holdings in February to deliver the project at Spark.

    Planned for large-scale industrial use, the site is expected to incorporate advanced warehouse and building management systems, end-to-end digital connectivity, automation and robotics.

    It will also be developed in line with internationally recognised sustainability standards, featuring solar photovoltaic readiness, electric-vehicle charging infrastructure and a target of Leed Gold certification.

    The development aims to support the next stage of Saudi Arabia’s logistics and supply chain expansion.

    Under the deal structure, Arcapita will provide funding and retain ownership of the asset, while Asmo will develop the facility and then lease and operate it under a 22-year occupational lease.

    According to a statement, “the scheme will be executed via a forward-funding model, underscoring a long-term commitment to national infrastructure”.

    Asmo added that this will be its first purpose-built logistics centre and one of four strategic locations planned to anchor its nationwide logistics network, aligned with the National Transport and Logistics Strategy under Saudi Vision 2030.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21267403/main.gif
    Yasir Iqbal