A major data center company has paused investment in AI infrastructure projects and data centers in the Middle East amid the Iran war, its CEO has told CNBC.
As oil prices have skyrocketed and supply chains have been heavily disrupted by conflict in the region, the future of huge 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.”
The slowdown follows huge spending in the Middle East from governments, as well as hyperscalers and data center developers looking to take advantage of cheap electricity and land, as Gulf states positioned themselves as key players in the AI boom.
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.
In March, AWS facilities in the UAE and Bahrain were hit by Iranian drones, causing outages in banking, payments, enterprise and consumer services.
“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.”
Data center workforce
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.
“We’re not mandating anyone be in the facility, they have to make a decision based on what’s right for them and their family…It’s a really tough situation,” he said, adding that workers who choose to remain 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 welfare packs for all staff members.
The data center developer is now focusing on how to operate facilities remotely via electronic means.
Data center workers may increasingly see a “hazard pay rate” built into salaries in the future, William Self, chief workforce strategist at global workforce consulting firm Mercer, previously predicted.
“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,” Self said.
