Tencent's Middle East Push Signals New Front in Global Cloud Wars

A $155 billion IT market is about to get a lot more crowded.

Tencent's cloud chief Dowson Tong told CNBC the Chinese tech giant plans to expand its data center footprint across the Middle East over the next 12-18 months. The company already operates an availability zone in Saudi Arabia and is "actively exploring" building more data centers to serve cloud customers in the region.

"We do intend to increase our investment in the region and establish a stronger partnership network," Tong said, though he declined to specify exact timelines or countries for the expansion.

Why the Middle East Became Tech's New Battleground

The Middle East has emerged as a critical theater for global tech giants racing to build AI infrastructure. Last year, Nvidia, OpenAI, and others committed to a massive AI project under the Stargate brand in the UAE. Gartner analysts forecast IT spending in the Middle East and North Africa will hit $155 billion in 2025—a 9% year-over-year jump that outpaces global growth rates.

This isn't just about market size. It's about strategic positioning in a region that's actively diversifying away from oil dependency and investing heavily in digital transformation. Countries like Saudi Arabia and the UAE are pouring billions into Vision 2030 and similar initiatives that require massive cloud computing capabilities.

Tencent already has customers in Saudi Arabia, including Keeta, the international food delivery arm of Chinese giant Meituan. Regional gaming companies are also using Tencent's Saudi-based cloud services—a natural fit given Tencent's position as one of the world's largest gaming companies.

Direct Challenge to US Cloud Giants

Tencent's Middle East expansion puts it on a collision course with Amazon, Microsoft, and Google—the triumvirate that has dominated global cloud computing. But Tencent has a unique angle: leveraging its massive Chinese customer base for international expansion.

Companies using Tencent's cloud services in China can seamlessly extend to international markets, creating a "follow the customer" strategy that US rivals can't easily replicate. For Tencent, which still derives most revenue from gaming, cloud computing represents crucial business diversification.

The Broader Chinese Tech Exodus

Tencent isn't alone in this regional pivot. Lenovo, the world's biggest PC company, has established its regional headquarters in Saudi Arabia and is building a manufacturing plant there. "There's so much initiative and investment going into the Middle East. We're very excited about the opportunity," Lenovo CFO Winston Cheng told CNBC.

This represents a strategic shift for Chinese tech companies. As US-China tensions make American market expansion increasingly difficult, the Middle East offers a politically neutral ground with massive growth potential and fewer regulatory hurdles.