Major data center company pauses investment decisions in Middle East amid Iran war

A prominent data center firm has decided to suspend its investments in AI infrastructure and related projects in the Middle East due to the ongoing conflict in Iran, as revealed by the company's CEO in an interview with CNBC. The surge in oil prices and significant disruptions to supply chains have cast doubt on the future of substantial digital infrastructure initiatives in the region. As tensions escalate, key assets have become potential military targets, leading to forecasts of shortages for essential materials needed to support the build-out of AI infrastructure. Recently, a data center in Abu Dhabi, managed by Pure DC, which is owned by Oaktree, was damaged by shrapnel from an Iranian attack. CEO Gary Wojtaszek stated that all investment decisions regarding new data center opportunities are currently on hold, emphasizing that no one is willing to commit to new projects until the situation stabilizes. "No one's going to run into a burning building, so to speak," Wojtaszek commented, reflecting on the hesitance to invest in new capital ventures under the current conditions. This decision comes after a period of substantial investment in the Middle East, as governments and major tech companies sought to capitalize on the region's affordable electricity and land, positioning themselves as leaders in the AI sector. Despite the current challenges, Pure DC remains optimistic about long-term prospects in the Middle East. Wojtaszek mentioned that planning and discussions surrounding data center projects are ongoing. The company is already operational in the UAE and has intentions to expand into Riyadh, Saudi Arabia. In March, Iranian drone strikes impacted AWS facilities in the UAE and Bahrain, causing interruptions across various sectors, including banking and consumer services. Wojtaszek emphasized that while the geopolitical landscape may be slowing investment in the sector, the demand for digital services remains robust. He noted that the region's ambitious digital initiatives aim to enhance government operations and modernize enterprises. With the escalating situation, on-site workers are facing heightened safety concerns. Pure DC is offering support to employees in the Middle East, allowing them to make personal decisions regarding their safety. Wojtaszek stated, "We're not mandating anyone be in the facility; they must decide what is best for them and their families." For those remaining on-site, Pure DC is providing additional benefits, including flexible work arrangements and extra support packages. The firm is also exploring ways to manage operations remotely through digital means. Looking ahead, experts are predicting that data center employees may receive hazard pay as compensation for the risks associated with working in potentially dangerous locations, with added psychological stress influencing compensation structures in the industry.