Market Trends of Middle-East Data Center Cooling Industry
IT and Telecom Expected to Experience Highest Growth
- To facilitate the transition to knowledge-based economies, the governments of the United Arab Emirates and Saudi Arabia are prioritizing digital initiatives such as 5G. With national consumer initiatives such as digital payments, smartphones are leading the transition to a digital lifestyle. The main drivers of this expansion were larger markets such as Iraq and Egypt, which continued to grow despite their huge current user bases. With the proliferation of smartphones and the use of 5G devices, the amount of raw data is expected to grow. More smartphone users can lead to increased data consumption and increased internet usage. The need for more data centers has increased the demand for cooling equipment in the region.
- In May 2024, Zain KSA unveiled its investment of SAR 1.6 billion, targeting enhancing its infrastructure, 5G network, and digital services ecosystem. This move, part of a broader integrated expansion strategy, underscores Zain KSA's commitment to fostering digital inclusion throughout the Kingdom. The goal is to establish a cutting-edge digital infrastructure prioritizing an exceptional customer experience. With these strategic investments, Zain KSA plans to broaden its 5G network reach from 66 cities to 122 cities and governorates nationwide, prominently including Makkah and the Holy Sites. Notably, Zain KSA is set to become the inaugural telecom operator to achieve comprehensive 5G coverage across all its towers in the Holy Sites.
- The growth of Internet of Things (IoT) devices, cloud adoption, and artificial intelligence (AI) applications are growing in the region, and they require extensive data processing and storage capabilities. For instance, in May 2024, a government-backed research institute in the United Arab Emirates is making significant strides by unveiling a cutting-edge open-source generative AI model. This move garners attention and solidifies the country’s position as a key contender in the global AI landscape.
- In addition, the Saudi Vision 2030, to transform the Saudi Arabian economy and society, is playing a pivotal role in driving the growth of the ICT market in Saudi Arabia. Digital transformation and e-government, the National Industrial Development and Logistics Program, 5G deployment, data governance, and cybersecurity are some key initiatives under Vision 2030 that support the growth of the data center market. Such instances in the market are expected to create more need for data centers, boosting the demand for data center cooling infrastructure manufacturers in the coming years.
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Saudi Arabia to Hold Highest Market Share
- Saudi Arabia has emerged as one of the technology hubs in the Middle East and Africa. As big IT and healthcare companies gain access to the market, demand for data centers in the region is soaring so that companies can store their data within borders.
- As creative media content pivots toward content delivery networks, and with the advent of IoT, the expansion of big data, and the introduction of 5G, the appetite for data in Saudi Arabia is surging. Enhanced network connectivity, bolstered by government backing, alongside a rapid uptick in big data and IoT service adoption, are key drivers fueling the Saudi Arabian data center market's expansion.
- Positioned at the crossroads of Asia, Africa, and Europe, Saudi Arabia has leveraged its strategic location to bolster its data center sector. The Red Sea and Arabian Gulf witness a significant influx of subsea cables, further enhancing the region's connectivity. The data center industry, emerging in the early 2000s, primarily caters to the telecom, banking, and finance industries. Over the years, a surge in both local and international investments has catalyzed the sector's growth, prompting the development of Tier-III and Tier-IV certified data centers.
- In March 2024, Zoho Corp., a prominent leader and parent to renowned brands like ManageEngine, Zoho.com, TrainerCentral, and Qntrl, inaugurated its inaugural data centers in the Middle East. Situated in Jeddah and Riyadh, these data centers in Saudi Arabia are now fully operational. Established to comply with the country’s Personal Data Protection Laws (PDPL), these centers ensure that local data remains within the Kingdom's geographical confines.
- Furthermore, in alignment with Saudi Arabia's Vision 2030 objectives, tech behemoths like Google, Microsoft, and IBM have established data centers and are eyeing further expansions. These developments, underscoring the region's surging demand for data centers, consequently spurred an increased need for data center cooling solutions during the study period.
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