This is the wrong kind of tech boom

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In focus

• Scott Shuey explains why the war in the Middle East could spell trouble for data centers everywhere
• What you need to know about the Philippines’ entry into the regional battle for data centers
• Why capital expenditures by western hyperscalers aren’t stopping China

Hello reader,

I lived and worked as a journalist in the Middle East for over 13 years. Despite leaving over six years ago, I still have a lot of friends in the region.

So when the conflict started unfolding last weekend, I reached out to a lot of old friends to get a handle on the situation. None of us was really surprised, though. One friend who specializes in Middle East politics even called it “the most predictable war ever.”

Concerns that other countries could get dragged into the conflict aren’t new either. When I last flew to Dubai in 2020, the region was anxiously awaiting a possible war between Iran and the United Arab Emirates, which blamed the former for the bombing of oil tankers off its east coast.

But memories seem to be running a little short these days. The Middle East has since witnessed two tech booms, one in crypto and another in AI. A lot of money has been spent boosting infrastructure, including data centers.

Last Monday, two data centers in the UAE and one in Bahrain – all owned by AWS – were hit by drones and taken offline, causing disruptions in payment services. It’s a sobering reality check for the region, which was expecting a data center boom, including the massive 5-gigawatt Stargate data center in Abu Dhabi that was expected to go online this year.

Made by Miguel Cordon/Tech in Asia with the help of AI

That data center is expected to serve the Middle East and India. While no official announcement has been made regarding its future, questions about the security of these data centers are now being raised.

If that wasn’t enough, rising energy prices globally from the closure of the Straits of Hormuz will also affect data centers, increasing AI training costs.

Since the situation in the Middle East is still developing, the first editor’s pick for this week focuses on some related stories, leading with the battle for data centers here in Southeast Asia.

We’ll also look at the rise of AI wearables in India and examine how capital expenditure by the big US-based hyperscalers hasn’t been the moat they expected.

Scott Shuey, senior editor

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