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
  • Kuwait tenders two Al-Mutlaa City construction packages

    2 September 2026

    Register for MEED’s 14-day trial access 

    Kuwait’s Public Authority for Housing Welfare (PAHW) has tendered two contracts covering the construction of public buildings across five districts at its Al-Mutlaa City residential project.

    The first tender covers construction in the N5 and N6 districts, while the second covers N1, N3 and N4.

    The tenders were issued on 30 August, with a bid submission deadline of 30 September.

    The project is a housing scheme located 38.3 kilometres northwest of the Kuwait metropolitan area.

    It covers approximately 104 square kilometres and is expected to house up to 400,000 people.

    The mixed-use development will include residential, social, commercial and light industrial areas.

    In March 2023, MEED reported that PAHW had appointed France-based Egis as a project management consultant for the Al-Mutlaa City development.

    Under the agreement, Egis is providing programme-level service management, construction logistics and interface management services.

    The scope of work also includes cost management, a digital programme management system and a project management information system for the scheme.

    Al-Mutlaa City is one of the largest housing infrastructure projects being developed by the government as part of Kuwait’s Vision 2035.

    UK analytics firm GlobalData expects Kuwait’s construction industry to grow at an average annual rate of 7.1% in 2025-28, supported by investment in renewable energy, transport and oil and gas projects, as well as spending under the New Kuwait 2035 National Development Plan.

    Under this strategy, the government plans to invest KD350m ($1.1bn) to develop several sports projects in the country.

    The residential construction sector is expected to register average annual growth of 3.8% in 2025-28, supported by the government’s plan to build 65,500 housing units by 2029 through five projects.

    MEED’s September 2026 report on Kuwait includes:

    > COMMENT: Kuwait keeps dealmaking alive under fire
    > GOVERNMENT: Kuwait shows tentative signs of economic development
    > BANKING: Necessity is the mother of invention for Kuwaiti lenders
    > OIL & GAS: Regional war to have lasting impact on Kuwaiti oil sector
    > POWER & WATER: Kuwait utilities investment shifts towards water
    > CONSTRUCTION: Kuwait construction holds up despite regional strife
    > MARKET TALK: Kuwait stands resilient amid regional tensions

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19245517/main.png
    Yasir Iqbal
  • Preferred bidders emerge for Zatca residential PPP

    2 September 2026

     

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Zakat, Tax and Customs Authority (Zatca), through the National Centre for Privatisation and PPP (NCP), has selected preferred bidders to develop residential buildings at various land ports across the kingdom.

    The project covers developments across nine land ports, separated into two packages.

    Local firm Saudi Arabian Trading & Construction Company has been selected as the preferred bidder for the first package, which includes the Al-Batha, Salwa, Al-Raqi, Jadidat Arar, Al-Wadiah and Empty Quarter sites.

    Bahrain-headquartered Lamar Holding is the preferred bidder for the second package, which includes land ports at Al-Hadithah, Halat Ammar and Al-Durrah.

    The project will be implemented as a public-private partnership (PPP) on a design, build, finance, operate, maintain and transfer basis, with a contract duration of 23 years, including the construction period.

    The contract covers the construction and management of new residential buildings and associated facilities at the land ports, as well as the rehabilitation of existing facilities.

    The project is the latest scheme in the kingdom’s PPP pipeline. In January, Saudi Arabia launched a national privatisation strategy aimed at mobilising $64bn in private sector capital by 2030.

    Building on the privatisation programme first introduced in 2018, the strategy focuses on unlocking state-owned assets for private investment and privatising selected government services.

    In a statement, NCP said the strategy comprises 147 opportunities drawn from a broader pipeline of more than 500 projects across 18 sectors.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19244076/main.jpg
    Yasir Iqbal
  • NWC confirms $347m Saudi sewage treatment plant deal

    2 September 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s National Water Company (NWC) has signed a contract worth more than SR1.3bn ($347m) with a Saudi-Chinese consortium to rehabilitate, operate and maintain nine sewage treatment plants (STPs).

    The 15-year contract covers plants located across the Hail, Qassim, Al-Jouf and Northern Borders provinces. The plants have a combined treatment design capacity of more than 337,000 cubic metres a day (cm/d).

    MEED exclusively reported in January that the consortium comprising China’s Jiangsu United Water Technology and Saudi-based Armada Holding had won the contract for the project.

    The contract is for the Northern Cluster Sewage Treatment Plants Package 10 (LTOM10) and includes an initial three-year period for rehabilitation and upgrade works, followed by long-term operation and maintenance.

    NWC said the contract was signed with a tariff of SR0.69 ($0.18) a cubic meter.

    As MEED understands, United Water will be responsible for design, financing, operation and part of the construction works. Saudi Arabia’s Armada Holding will handle construction, equipment import customs clearance and local business communications. UAE-registered Prosus Holding will act as the financial investor.

    LTOM packages

    The same consortium is also expected to sign a contract for Package 11 of the LTOM programme in the coming months.

    In April, MEED exclusively reported that the consortium won the contract for this project, which will have a combined capacity of about 440,000 cm/d.

    Bids for North Western B Cluster (LTOM12) remain under evaluation. The contract covers the construction and upgrade of seven STPs with a combined capacity of about 162,000 cm/d.

    NWC also tendered the Eastern A Cluster (LTOM14) package in April, covering the upgrade of six existing STPs with a capacity expansion of 30,000 cm/d at the Al-Jarodia STP.

    This will increase total treatment capacity from about 263,000 cm/d to approximately 293,000 cm/d, with an estimated cost of $180m.

    The bid submission deadline is 30 September.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19242964/main.jpg
    Mark Dowdall
  • Egypt signs PPA for 1GW Ras Shokeir wind farm

    2 September 2026

    Register for MEED’s 14-day trial access 

    A joint venture of the local Hassan Allam Utilities Energy and Infinity Power has signed a power purchase agreement (PPA) with Egyptian Electricity Transmission Company (EETC) for the development of the 1GW Ras Shokeir wind project in Egypt.

    The project is located in Egypt’s Red Sea Governorate, within the Gulf of Suez wind corridor. It will cover approximately 143 square kilometres.

    The PPA has a 25-year term. The project will supply electricity to Egypt’s national grid.

    Ras Shokeir is expected to generate enough electricity to power more than 1.2 million Egyptian homes. It is also expected to avoid more than 1.36 million tonnes of CO2 emissions annually.

    The PPA was signed by EETC chairperson Mona Rizk and Infinity Power co-founder and CEO Nayer Fouad, representing the Infinity Power-Hassan Allam consortium.

    The signing brings the project closer to development as Egypt seeks to expand its renewable energy capacity. Egypt has set a target for renewable energy to make up 42% of the electricity mix by 2030 and 65% by 2040.

    This includes the 500MW Amunet 2 wind project, which is being developed by UAE-headquartered Amea Power following the commissioning of the first Amunet wind project in June 2025.

    Hassan Allam Utilities Energy and Infinity Power are also developing Egypt’s $560m West Minya solar plant, which will combine 1,000MWac of solar photovoltaic capacity with a 600MWh battery energy storage system.

    In June, MEED reported that a joint venture of Hassan Allam Construction and India’s Sterling & Wilson Renewable Energy had won the engineering, procurement and construction contract for the project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19242701/main1603.jpg
    Mark Dowdall
  • Iraq looks to accelerate oil pipeline projects

    2 September 2026

    Iraq’s Ministry of Oil has held talks with a delegation from Qatari company UCC on accelerating the progress of two major pipeline projects, according to a statement from Iraq’s Office of Media and Government Communication.

    The first proposed pipeline route extends from Basra, in southern Iraq, to Haditha, located about 200 kilometres northwest of Baghdad, then on to Faysh Khabur, which lies on the border with Syria and near the border with Turkiye.

    The second pipeline extends from Haditha to Syria’s coastal city of Baniyas.

    Discussions covered the contract type, implementation timeline and “other technical matters”, according to the statement released by the Iraqi government.

    During the meeting, Iraq’s Minister of Oil, Basem Mohammed Khudair Al-Abadi, emphasised the need to expedite the tendering process for the project contracts.

    He said all obstacles to progress on the projects needed to be eliminated.

    He also said weekly meetings will be held between relevant parties to reach agreements on the economic models for the pipelines and their routes.

    The Ministry of Oil said UCC is leading a consortium of companies developing the projects.

    It added that the consortium includes US-based Chevron, the investment company TI Capital and France’s TotalEnergies.

    In July, Iraq’s cabinet approved Basra Oil Company signing a ​heads of agreement and a non-disclosure agreement with the consortium to explore possible future oil pipeline projects.

    Under the terms of the agreement, the consortium will prepare technical and financial feasibility studies for strategic export pipeline projects.

    Also in July, US-based KBR was awarded a consultancy contract for the section of pipeline due to extend from Basra to Haditha.

    In April, Iraq announced the allocation of $1.5bn for the Basra-Haditha route, while the larger scheme is estimated at around $5bn.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19241649/main.jpg
    Wil Crisp