AI chip demand welcomes a heavyweight catalyst! Saudi Arabia's "AI Grand Plan" will lead the data center construction frenzy in the Middle East.

According to the latest analysis report by the global real estate service leader Jones Lang LaSalle (JLL), Saudi Arabia's strategy to promote economic digitization and create a global artificial intelligence center will make Riyadh, the capital of Saudi Arabia, the fastest-growing market for data centers in the Middle East in the next three years. This also means that the Saudi government and large enterprises in the Middle East will invest heavily in purchasing the most core infrastructure of data centers - AI chips hardware mainly based on AI GPUs and AI ASICs, as well as data center infrastructure including high-performance networking hardware and power equipment. It is understood that this real estate service agency predicts that by 2027, the scale of data centers in the Riyadh region (measured in megawatts) will expand significantly at an astonishing compound annual growth rate of 37%, almost double the growth rate of the other two major cities in the Middle East, Dubai and Abu Dhabi, and far exceeds the expected expansion level of around 15% in major countries like the United States in terms of data center scale. "We see Saudi Arabia vigorously advancing its digital transformation blueprint, aiming to become a global leader in the field of artificial intelligence," said Daniel Sopp, Data Center Research Director for Europe, the Middle East, and Africa (EMEA) markets at Jones Lang LaSalle (JLL), in an interview. "With favorable government policies, Saudi Arabia's data center market is experiencing a period of vigorous development." As an important part of its economic diversification strategy, Saudi Arabia is accelerating the construction of cloud computing infrastructure and large artificial intelligence data centers, aiming to make the Kingdom of Saudi Arabia a hub for artificial intelligence and technological innovation in the Middle East and even globally. With the rise of emerging industries in the Middle East and hundreds of companies establishing new EMEA headquarters in Riyadh, data demand is growing explosively. Saudi Arabia is showcasing a "non-oil economy vision" to the world! Plans to greatly develop AI Under the Saudi Crown Prince Mohammed bin Salman-led Saudi "Vision 2030" agenda, the Saudi government is investing billions of dollars in various cutting-edge technology fields, from the "NEOM Future City" to sports centers such as football and basketball, as well as global artificial intelligence centers and state-of-the-art semiconductor manufacturing plants. Saudi Arabia is still the world's largest oil exporting country, but under the leadership of Crown Prince Mohammed bin Salman, the Saudi government is striving to develop a non-oil economy, with "Vision 2030" being the core large-scale project of the "non-oil economy" under Crown Prince Mohammed bin Salman's leadership. It is understood that Saudi Arabia's "Vision 2030" is an ambitious national development plan aimed at reducing the country's overreliance on oil revenue through economic diversification and social reform, and driving the country towards sustainability and modernization. The plan was initiated by Crown Prince Mohammed bin Salman in 2016. The focus of this vision plan includes attracting international investment through a series of large projects in the future, such as NEOM (the future city project in Saudi Arabia) and the Red Sea project, while vigorously developing the tourism industry, high-tech industries, and renewable energy. Among them, the NEOM Future City is the most important vision plan for Crown Prince Mohammed bin Salman. NEOM includes multiple sub-projects, with the most famous being THE LINE, an intelligent linear city plan in Saudi Arabia that is completely free of cars, streets, and carbon emissions. THE LINE is planned to accommodate at least 9 million people and is presented in a 170 km long monolithic architectural form, where all basic services are within a five-minute walk, and the city is powered by 100% renewable energy. In addition, NEOM also includes other important areas such as Oxagon (an innovative industrial city), Trojena (a winter tourist destination), and Sindalah (a luxury island tourist destination). The sweeping trend of AI integration, AI computing power demand will surge rather than decrease It is understood that global technology giants such as Microsoft Corporation, Amazon.com, Inc.'s cloud computing division AWS, and Equinix have signed agreements to build super-large data centers in Saudi Arabia, and the U.S. startup AI chip company Groq is cooperating with the international oil giant Saudi Aramco based in Saudi Arabia to develop an artificial intelligence inference computing power center. Jones Lang LaSalle (JLL) pointed out in its report that tax incentives, economic free zone policies, and data sovereignty protection measures are jointly driving the Middle East AI investment boom led by Saudi Arabia. According to recent media reports, Saudi Arabia is planning a large-scale new AI project with an investment of up to $100 billion, and some of the funds will be used to expand the scale of data centers to counter the UAE's plan to build an AI center. Despite its ambitious nature, restrictions on the export of the most cutting-edge AI chips by NVIDIA Corporation by the United States have somewhat constrained its ambitious AI development plans, and the UAE also faces similar constraints. JLL's data shows that the current size of the data center market in the Middle East is only about $6 billion. As for existing data center capacity, the UAE maintains a leading position in the Middle East region, followed closely by Saudi Arabia. The real estate technology consulting firm The Proptech Connection believes that with a population of approximately 35 million and comprehensive investments in AI technology, Saudi Arabia will rapidly rise to the regional level in the data center market. "With unwavering strategic determination and very strong resource deployment capabilities, Saudi Arabia may help overcome challenges such as rising energy costs, resource allocation, and execution difficulties, and time pressures in building large-scale data centers," said Stephen McDonald, Managing Partner at Proptech. "This country has a very grand vision and has sufficient capital strength to fully stand at the forefront of the industry." The global "super-scale cloud" trend is sweeping in.As a service and cloud AI computing power provider, it has been investing huge amounts of money in data center construction or expansion, compared to Amazon.com, Inc. (AMZN.US), Microsoft Corporation (MSFT.US), and the parent company of Facebook, Meta (META.US), in order to meet the surging demand for artificial intelligence training/inference computing power.Regarding the expenditure plan for 2025, the management team of Amazon.com, Inc. expects it to reach 100 billion US dollars, and Amazon.com, Inc. believes that the emergence of DeepSeek signifies a significant expansion of the future inference-side AI computing power demand, therefore increasing expenditures to support the development of AI business. CEO Jiaxi stated: "We will not make purchases without seeing significant demand signals. When Amazon.com, Inc. AWS expands its capital expenditure, especially in rare business opportunities like AI, I believe this is a very positive signal for the mid-to-long-term development of the AWS business." As DeepSeek continues to be popular worldwide with the launch of DeepSeek R1, and the latest research from DeepSeek company shows that the NSA mechanism implemented at the base of Transformer achieves revolutionary training and inference efficiency improvement for AI large models, sparking global AI large model developers to follow this "ultra-low-cost AI large model computing power paradigm" and drive AI application software (especially generative AI software and AI agents) to accelerate penetration into various industries worldwide, thoroughly revolutionizing the efficiency of various business scenarios and significantly increasing sales. The AI computing power demand driven by AI chips as the core may show exponential growth in the future rather than the previously expected "DeepSeek shockwave" causing a cliff-like decline in computing power demand. Microsoft Corporation CEO Nadella previously mentioned the "Jevons paradox" when technological innovation significantly improves efficiency, resource consumption not only does not decrease, but actually increases, transferred to the field of AI computing power, the trend of the surge in AI large model applications will bring about unprecedented AI inference computing power demand. For example, after DeepSeek connected to WeChat, it is often seen that DeepSeek deep thinking cannot respond to customer demands, verifying that the current AI computing power infrastructure in the Chinese market is far from meeting the demand for AI computing power. As Huang Renxun, CEO of NVIDIA Corporation, said in the latest NVIDIA Corporation (NVDA.US) earnings conference call, the market demand for Blackwell architecture AI GPU continues to expand, and the demand for AI computing power based on AI chips remains strong: "DeepSeek-R1 has ignited global enthusiasm, and the company is excited about the potential demand brought by AI inference. This is an outstanding innovation, but more importantly, it has open-sourced a world-class inference-side AI model. Models like OpenAI, Grok-3, DeepSeek-R1, etc., are super large models in the inference domain that almost every AI developer is applying R1 or chains of thought and reinforcement learning technologies to expand the performance of their models. Inference large models will consume more than 100 times the computing power in the future."