A major data center company has halted investments in AI infrastructure projects and data centers in the Middle East amid the Iran war, its CEO has told CNBC.
As oil prices skyrocket and supply chains are severely disrupted by conflict in the region, the future of massive digital infrastructure plans in the Middle East has become uncertain.
Assets in the region have become military targets and shortages of key materials needed to build AI infrastructure are predicted. A data center in Abu Dhabi, operated by Oaktree-owned Pure DC, was damaged by shrapnel from an Iranian attack.
The company’s CEO, Gary Wojtaszek, told CNBC that “investment decisions on all data center opportunities have been put on hold. No one wants to develop new data centers and put in new GPUs until things settle down.”
“That being said, no one is going to go into a burning building,” he said in an interview Tuesday. “Until everything gets sorted out, no one is going to deploy massive amounts of new additional capital to do anything.”
The slowdown is being driven by heavy spending by governments in the Middle East, as well as by hyperscalers and data center developers looking to take advantage of cheap power and land, as the Gulf countries position themselves as key players in the AI boom.
Pure DC still sees “long-term opportunity” in the Middle East, Wojtaszek said, adding that long-term “planning and discussion” around data center projects there continues.
Pure DC operates in the United Arab Emirates – where its Abu Dhabi data center on Yas Island was hit by shrapnel – and it also plans to expand into Riyadh, Saudi Arabia.
In March, AWS facilities in the United Arab Emirates and Bahrain were hit by Iranian drones, causing disruptions to banking, payments, enterprise, and consumer services.
“Although investment in the region may slow due to the current macro political environment, digital demand remains unchanged,” Wojtaszek said in a statement last week.
“The region’s ambitious national vision recognizes transformation enabled by digital government, enterprise modernization and a future-ready workforce.”
data center workforce
As data centers become critical infrastructure, with onsite employees facing increasing security risks, Pure DC is offering some benefits to its Middle East employees, Wojtaszek said.
“We’re not forcing anyone to stay in a facility, they have to make that decision based on what’s right for them and their family…it’s a really difficult situation,” he said. He said workers who choose to stay on site will get “additional comfort.”
Some of these perks include location flexibility for non-essential workers, who can leave the country with their families and work remotely, as well as additional wellness packs for all staff members.
Data center developers are now focusing on how to operate facilities remotely through electronic means.
Data center employees can see faster William Self, chief workforce strategist at global workforce consulting firm Mercer, had previously predicted that wages would rise in the future, creating a “dangerous pay rate.”
“You can also imagine a certain mental burden for people who are working in facilities that they are well aware may be hot targets or bad actors, which may increase the type of compensation packages that we’ll see to lure this population into these centers,” Self said.
