Khazna, a leading data center developer based in the United Arab Emirates, is planning a significant expansion into Saudi Arabia as both nations vie to become hubs for artificial intelligence (AI) infrastructure. The company aims to capture at least 25% of the Saudi market, according to CEO Hassan Alnaqbi.
Khazna has identified two potential locations for its data centers in Saudi Arabia, where it faces competition from local firms and telecommunications companies, as well as emerging startup data center developers. Despite this, Alnaqbi believes these startups lack the experience to handle the needs of hyperscalers—large-scale cloud computing giants—in terms of design, delivery, and operation.
The Middle East has become a hotspot for global cloud-computing firms, drawn by the region’s abundant cheap energy and real estate. Both the UAE and Saudi Arabia have made AI infrastructure a key component of their economic diversification plans, leading to a competitive race to build data centers for storing servers and advanced chips.
Khazna, formed by Mubadala, is the largest data center operator in the Middle East and North Africa (MENA). In 2022, it became part of G42, the Emirati tech conglomerate backed by Microsoft. Alnaqbi confirmed that Khazna currently holds 71% of the UAE’s data center capacity and is expanding globally, thanks in part to recent funding from Silver Lake and the Abu Dhabi fund MGX. These investors bought a 40% stake from Emirates Telecommunications Group Co. for $2.2 billion, bringing Khazna’s valuation to $5.5 billion.
Despite its rapid growth, Alnaqbi declined to comment on the company’s exact valuation but did note that Khazna’s revenue has seen significant increases in some years. The company now employs about 250 people.
Saudi Arabia has recently mandated that all personal and financial data be stored in local data centers, pushing international companies to build facilities in the kingdom to avoid losing valuable contracts. Notable companies such as Amazon, Google, and Oracle have committed to building data centers in the country, with Amazon planning to invest $10 billion in the region. However, Microsoft has recently scaled back some of its data center projects globally.
Research and Markets forecasts that the Middle East and North Africa will see $12 billion in new data center investments by 2027, with Saudi Arabia accounting for nearly half of the region’s capacity. The country is currently building two gigawatts of computing capacity, costing between $8 million and $12 million per megawatt.
Khazna’s expansion plans extend beyond Saudi Arabia, with the company currently constructing a dozen data centers globally, including in Turkey and Kenya, and eyeing additional locations in Europe. Khazna currently provides 263 megawatts of computing power, with an additional 175 megawatts under construction.
In line with growing geopolitical concerns, Khazna has phased out Huawei components from its data centers, following Microsoft’s $1.5 billion investment into G42 and its pledge to divest from Chinese technology holdings. Despite restrictions on access to leading American-made AI chips, both G42 and Khazna’s leadership remain hopeful that the situation will improve.
