Musk's xAI Joins Hands with Nvidia to Develop a 500MW Datacenter in Saudi Arabia

TMTPOST -- Elon Musk announced Wednesday that his artificial intelligence (AI) startup xAI will partner with Nvidia Corp. to build a massive data center in Saudi Arabia, marking the latest expansion by a U.S. tech company into the Middle East's growing AI infrastructure market.

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Speaking at the U.S.-Saudi Investment Forum in Washington, D.C., Musk said the facility will consume 500 megawatts (MW) of power and will be xAI's first partnership with Humain, Saudi Arabia's state-backed AI company. Nvidia CEO Jensen Huang joined Musk at the event, which coincided with Saudi Crown Prince Mohammed bin Salman's state visit.

The data center will deploy approximately 600,000 Nvidia graphics processing units (GPUs), making it substantially larger than xAI's Colossus 1 facility in Memphis, which represents around 300 MW of computing power. The project builds on Nvidia's May announcement to provide Humain with chips requiring 500 MW of power.

The data center announcement was made at the Kennedy Center event featuring President Trump and senior executives from multiple tech companies. The unveiling came on the heels of a new AI Memorandum of Understanding between the U.S. and Saudi Arabia announced Tuesday, which gives Saudi Arabia access to advanced American AI systems while protecting U.S. technology from foreign influence, according to the White House.

During his presentation, Musk briefly confused megawatts with gigawatts when describing the project's scale, joking that a 500-gigawatt facility would cost "eight bazillion, trillion dollars." He later predicted that humanoid robots would become "the biggest product ever" and suggested that solar-powered AI satellites could become the lowest-cost option for AI computing within four to five years.

The announcement came one day after the Wall Street Journal reported that xAI is in advanced talks to raise $15 billion in new equity at a $230 billion valuation, a significant jump from the $113 billion valuation disclosed after acquiring X in March.

The announcement reflects a broader trend of U.S. tech companies expanding into the Middle East, which offers abundant land, energy, and sovereign wealth funds eager to finance development. Amazon.com, Nvidia and its rival Advanced Micro Devices Inc. (AMD) announced billions of dollars in investment in Saudi Arabia in May during Trump's visit to the kingdom.

Humain is also partnering with other chip makers. AMD will provide its Instinct MI450 GPUs requiring as much as 1 gigawatt (GW) of power by 2030. Qualcomm will deploy 200 MW of its AI200 and AI250 data center chips. Private-equity firm Blackstone announced it will start building AI data warehouses in Saudi Arabia for the first time.

Huang described Nvidia's strategy as "sovereign AI," arguing that nations will increasingly need to build data centers for AI to protect national security and culture. The approach represents a potentially massive market for Nvidia's AI chips beyond a handful of hyperscalers.

U.S. AI companies including OpenAI and xAI need government approval to export chips to the Middle East because of security concerns. They are competing to build the largest data centers capable of training the most advanced models.

The U.S. is expected to soon approve the export of advanced AI chips to Humain and its U.S. partners, the Wall Street Journal on Wendesday cited people familiar with the discussions. It was reported that the approvals allow U.S. companies to sell up to 35,000 of Nvidia's GB300 servers or their equivalents to both G42, a state-run AI company based in Abu Dhabi, and Humain.