Elon Musk's xAI Pursues Leasing Saudi Data Centers

Bloomberg reported on the 16th (local time) that Elon Musk's xAI is seeking to lease and use data centers currently being built in Saudi Arabia. Citing sources, Bloomberg stated that xAI is in discussions to lease part of the capacity from local data centers operated by AI companies invested in by the Saudi Public Investment Fund (PIF), such as Humane, in order to utilize low-cost electricity and expand cooperation with Saudi Arabia.

Humane, chaired by Saudi Arabia's de facto leader Mohammed bin Salman, was launched in May with the goal of providing comprehensive AI services. However, it has yet to establish the key infrastructure necessary for AI development. If a deal with xAI is finalized, it is expected to become a long-term usage contract on the scale of gigawatts (GW).

In addition to Humane, another AI company currently in discussions with xAI is building a smaller-scale facility and reportedly will be able to lease out a 200MW (megawatt) capacity in the near future. While xAI has already built and operates a large-scale data center named 'Colossus' in Memphis, USA, it is pushing for additional facilities to accelerate advanced AI model development. Particularly, AI data centers consume huge amounts of electricity, and Saudi Arabia has the advantage of much lower energy costs compared to the U.S.

One Bloomberg source said that xAI has also contacted G42, an AI company backed by the United Arab Emirates (UAE) sovereign wealth fund, regarding a potential data center transaction. However, Bloomberg reported that Saudi Arabia is considered a more attractive option for xAI due to its better access to cutting-edge AI chips and abundant capital.

In May, Saudi's Humane signed an agreement with NVIDIA to secure more than 18,000 units of the latest AI chip, the GB300 Blackwell chip.

Geun-i Ko, koko@hankyung.com