Saudi smart city development NEOM and data centre operator DataVolt are to develop the region’s first net-zero AI factory. An initial investment of USD 5 billion by DataVolt will fund the first phase of the factory’s development. It is expected to be operational by 2028.

The AI factory will be sited at Oxagon, the planned industrial smart city that is being built at the south west corner of the NEOM development corridor, on the Red Sea. Oxagon will focus on Industry 4.0 developments with circular economy principles to create a clean manufacturing ecosystem. The city will embed robotics, automation, AI and IoT. It aims to be powered by renewable energy to allow manufacturers to operate more efficiently, sustainably and profitably.

The 1.5-gigawatt NEOM-based AI factory will integrate a wide range of computing densities and energy-efficient architectures. The NEOM AI factory is aimed to address the global challenges posed by traditional data centres. It will also expand the Kingdom of Saudi Arabia’s digital infrastructure and is aimed at reinforcing its position as the region’s leading data hub.

An AI factory is a large-scale computing infrastructure that uses AI to create and manage AI models. AI factories use advanced hardware and software to process large amounts of data and train AI models. As they employ hardware and software designed for AI operations at massive scale, AI factories improve AI model accuracy and efficiency compare to conventional data centres. They allow the creation of AI-supported new business models, support AI-based agile software delivery, and generate deeper and more wide ranging insights from data.

According to the International Energy Agency, data centres currently consume between 1 to 1.3 percent of global electricity demand. With the advancements of generative AI, power consumption is expected to grow exponentially over the next decade. The energy-intensive nature of data centres and the cumulative impact of associated carbon emissions necessitate a rapid need for transition to clean sustainable solutions.

Commenting on the announcement, Vishal Wanchoo, CEO of Oxagon, said: “The Kingdom is at the forefront of the global energy transition. At Oxagon, we are accelerating a renewable energy industrial ecosystem that is set to power businesses with green energy and technology solutions. The agreement with DataVolt highlights the potential impact of the sustainable infrastructure Oxagon offers its tenants and sets the foundations for the first green-AI workload to come on-stream in the Kingdom of Saudi Arabia along with the necessary computing power for regional and global impact.”

Rajit Nanda, CEO of DataVolt, said: “This agreement with NEOM and Oxagon underscores our unwavering commitment to support the Kingdom’s vision of becoming a regional digital and AI hub. The Kingdom’s strategic location, coupled with its abundant green energy resources, aligns perfectly with DataVolt’s mission in providing state-of-the-art sustainable data centres. This project marks a significant milestone in advancing the Kingdom’s leadership as a digital powerhouse in the region.”

As part of the agreement, Oxagon will lease DataVolt the land for the development of the facility and provide the sustainable data centre operator with infrastructure support. The ambition is for the facility to be entirely powered by renewable energy, providing a fully integrated, end-to-end data centre solution. The project will utilise advanced cooling technologies and is designed to operate at net zero, addressing the global challenges of power availability and the carbon footprint posed by data centres.

Oxagon’s location on the Red Sea coast, combined with access to sub-sea cables providing fibre connectivity, alongside cost-competitive renewable energy, green hydrogen, and a rapidly expanding industrial ecosystem, have been key in its selection by DataVolt to develop a large-scale green AI factory.