The U.S.-Israel war on Iran may be creating a narrow opening for Chinese tech companies in the Gulf.
On March 16, China’s HuaweiHuaweiHuawei is a Chinese technology company focused on mobile phones and telecommunications, and is seen as a poster child for China’s global tech ambitions.READ MORE Cloud posted a message on X highlighting a warning against relying on a single cloud provider. “Single-region dependency is a thing of the past,” Huawei Cloud, one of China’s leading cloud operators in the Gulf, posted on its official regional account on X in March. “With uncertainties all around, multi-cloud is no longer optional — it’s essential.”
Huawei did not explicitly mention the war, but it has continued to amplify this message as tensions between the U.S. and Iran have escalated since early March. ADD
On March 1, Iranian drones struck three Amazon Web Services data centers in the United Arab Emirates and Bahrain, the first confirmed military attack on a hyperscale cloud provider. The strikes disrupted services across banks, fintech platforms, and ride-hailing apps in the Gulf.
Iran has since threatened to continue targeting American tech infrastructure, including the $30 billion Stargate AI data center that houses Nvidia GPU clusters and proprietary OpenAI systems.
Experts say the shock of these attacks could reshape how governments in the region assess cloud providers. As geopolitical risks rise, Chinese companies may be seen as more stable alternatives, particularly if the conflict persists.
Much will depend on how American tech companies respond to the attacks, and whether Gulf governments begin to prioritize resilience and diversification over long-standing alliances.
“The war with Iran and the Iranian attacks on data infrastructure in the Gulf have highlighted that data centers are now strategic assets and potential targets in modern warfare,” Yuval Less, a research associate at the Institute for National Security Studies in Tel Aviv, told Rest of World.
“In the Gulf, particularly in the UAE and Saudi Arabia, states are likely to continue hedging between the United States and China as part of their broader efforts to advance technological modernization and develop their digital infrastructure,” Less said.
According to an AWS public tracker, its services in the two countries have seen different degrees of disruption as of April 7. In response to Rest of World’s queries, AWS reiterated its March 24 statement: “The AWS Bahrain Region has been disrupted as a result of the ongoing conflict. We are working closely with local authorities and prioritizing the safety of our personnel throughout our recovery efforts.”
Google, Microsoft, Oracle, Alibaba, Huawei, and Tencent did not respond to Rest of World’s questions about their geographical footprint in the region and the impact of the war on their cloud operations.
The Gulf has long been a battlefield for American and Chinese cloud companies.
China’s Alibaba was the earliest entrant in the region, launching its first data center in Dubai in 2016. Amazon and Microsoft started building multiple data centers in Bahrain and the UAE, respectively, in 2019, while Oracle began building its cloud infrastructure in the UAE a year later. Google signed partnership deals with Qatar in 2020 and started building data centers there in 2023.
Despite being late entrants, American companies have rapidly scaled their businesses in the region.
Amazon, Google, Microsoft, and Oracle each operate at least two cloud regions — where multiple data centers operate — in the Gulf.
In May 2025, U.S. President Donald Trump boosted America’s cloud interest in the Gulf, securing hundreds of billions of dollars in deals during his trip to Saudi Arabia, Qatar, and the United Arab Emirates. These deals include major AI and cloud partnerships, such as a planned 5-gigawatt data center campus in Abu Dhabi and expanded access to advanced U.S. AI chips.
Meanwhile, Chinese cloud providers have also made some inroads in the region, but they face limitations as Gulf states have prioritized high-stakes partnerships with U.S. tech firms due to the implications for national security, experts said.
“Technology is a strategic sector for regional governments and a source of national security concern… It’s very different from inking an MoU [Memorandum of Understanding] to boost tea or automobile imports,” Robert Mogielnicki, non-resident scholar at the Arab Gulf States Institute in Washington D.C., told Rest of World.
A prolonged conflict, however, could force companies to reassess their commitments in the region, Mogielnicki said.
“Gulf countries did largely pivot away from Chinese AI companies to reinforce their diplomatic and economic relations with Washington,” Mogielnicki said. “If U.S. technology multinationals get spooked, this may create some space on the commercial playing field for Chinese competitors. But that’s not their preferred game plan.”
Chinese firms have long sought a foothold in this market. In 2016, Alibaba formed a joint venture with the Saudi Cloud Computing Company. In 2025, Alibaba opened a new data center in Dubai. Huawei expanded its Gulf presence through domestic telecom partnerships and scaled its Riyadh cloud hub in 2023. Tencent is the latest entrant. While it started building its first data center in Bahrain in 2021, it scaled up cloud infrastructure in 2025 with a $150 million Saudi investment.
At the same time, competition in cloud infrastructure in the Gulf has become far more crowded than a simple U.S.-China battle.
Gulf countries have increasingly invested in their own data center infrastructure, reducing reliance on external providers. Across the region, telecom operators and state-backed firms are building local capacity.
Saudi Arabia and the UAE are rapidly repositioning themselves as global AI hubs, investing tens of billions of dollars in data centers, smart cities, and digital infrastructure. Saudi Arabia expects AI to contribute around 12% of GDP by 2030, while the UAE aims to generate roughly $96 billion from AI over the same period. The region’s data center market is projected to nearly triple to around $9.5 billion by 2030.
Qatar’s Ooredoo has spun off its data center arm, Syntys, which operates facilities across multiple countries and recently expanded in Doha. Saudi Arabia’s STC and Kuwait’s Zain are also expanding colocation infrastructure to attract enterprise and hyperscaler demand.
Even if Chinese cloud providers benefit in the near term, they could only gain traction as “secondary or backup options, particularly for non-critical workloads and regional redundancy”, Manish Ranjan, research director for software and cloud at IDC, told Rest of World.
“Any shift will depend less on the conflict itself and more on whether providers, Chinese or otherwise, can showcase sustained regional investment, strong partner ecosystems, regulatory compliance, and enterprise-grade service reliability,” he said.
