A major data center company has paused investment decisions in the Middle East amid Iran war tensions, highlighting growing geopolitical risks and uncertainty impacting global tech infrastructure expansion. The data center developer is now focusing on operating facilities remotely via electronic means.
In March, AWS facilities in the UAE and Bahrain were hit by Iranian drones, causing outages in banking, payments, enterprise, and consumer services.
A major data center company has paused investment in AI infrastructure projects and data centers in the Middle East amid the Iran war, reported CNBC. Following the rise in oil prices and supply chain complications, the future of large-scale digital infrastructure plans in the Middle East has become uncertain.
Assets in the region have become military targets, and shortages are predicted for key materials needed for the AI infrastructure buildout. A data center in Abu Dhabi, operated by Oaktree-owned Pure DC, was struck by shrapnel from an Iranian attack.
The company’s CEO, Gary Wojtaszek, told CNBC that investment decisions had been paused on “all data center opportunities. No one wants to develop new data centers and put new GPUs in until things get settled.”
“No one’s going to run into a burning building, so to speak,” he said in an interview on Tuesday. “No one’s going to put in new additional capital at scale to do anything until everything settles down.”
“Pure DC still sees long-term opportunity in the Middle East,” Wojtaszek said, adding that longer-term ‘planning and discussions’ around data center projects there have continued.
Pure DC operates in the United Arab Emirates, where its Abu Dhabi data center on Yas Island was hit by shrapnel and also has plans to expand in Riyadh, Saudi Arabia.
“While the current macro political environment may have slowed sector investment, digital demand remains unchanged,” Wojtaszek said in a statement last week.
“The region’s ambitious national visions recognise the transformation enabled by digital government, enterprise modernisation and a future-ready workforce.”
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The slowdown follows huge spending by governments in the Middle East, as well as by hyperscalers and data center developers seeking to capitalize on cheap electricity and land, as Gulf states positioned themselves as key players in the AI boom.
As data centers become critical infrastructure, onsite workers are facing increased safety risks, with Pure DC offering some benefits to its Middle East staff, Wojtaszek said.
“You could also imagine a certain psychic burden for people who are working in facilities that they know very well might be hot targets or bad actors, which could additionally increase the types of compensation packages that we would see to lure this population to these centers,” William Self, chief workforce strategist at global workforce consulting firm Mercer, said.