Elon Musk’s AI startup, xAI, is reportedly in preliminary discussions to lease data centre capacity in Saudi Arabia, signaling a potential strategic shift to tap into the Gulf region’s rapidly evolving tech infrastructure. According to sources familiar with the matter, the move is aimed at supporting the company's growing need for high-performance computing (HPC) resources necessary to train and deploy large language models and other generative AI systems.
Saudi Arabia Emerges as a Tech Infrastructure Powerhouse
The talks with Saudi entities reflect both sides' interests — Musk’s search for alternative and scalable compute resources and Saudi Arabia’s ambition to become a global leader in AI and digital technologies under its Vision 2030 plan. The Kingdom has already made significant investments in AI, cloud computing, and semiconductors, with its sovereign wealth fund, the Public Investment Fund (PIF), playing a key role.
Potential Collaboration Could Strengthen Regional AI Ecosystem
While specific details regarding partners or facilities have not been disclosed, insiders suggest that xAI may explore collaboration with government-backed tech entities such as Saudi Aramco’s tech ventures or NEOM’s tech infrastructure wing. These facilities are being developed with the capability to house GPU-intensive AI workloads and offer attractive energy incentives for global tech firms.
Strategic Diversification Amid Rising AI Competition
xAI’s interest in the Middle East follows broader industry trends, as AI firms worldwide scramble to secure computing resources amid shortages in NVIDIA chips and data centre bottlenecks in the U.S. By expanding into regions with developing yet ambitious digital infrastructure, Musk’s xAI could gain a foothold in an underutilized market while diversifying operational risk.
No Official Confirmation Yet, but Signs Point to Progress
Though no formal agreement has been announced, the ongoing discussions indicate the seriousness of xAI’s intent to scale globally and capitalize on emerging digital corridors. Saudi Arabia's tech-forward outlook, combined with its strategic investments in green energy-powered data centres, makes it a promising ally for AI firms like xAI looking to expand beyond traditional hubs.