A new partnership between INNOVO, Castrol ON, and LiquidStack aims to bring the UAE its first modular, AI-ready liquid-cooled data centre. Announced at Capacity Middle East, the project will deliver a proof-of-concept (POC) data centre unit designed to handle high-density AI and high-performance computing (HPC) workloads.

The unit combines INNOVO’s modular data centre design, Castrol ON’s thermal management fluids, and LiquidStack’s direct-to-chip liquid cooling technology.

According to the partners, the POC will be containerised and fully integrated, enabling testing of cooling efficiency and operational readiness before on-site deployment. Assembly and testing will take place in the UAE, with the POC expected to be completed by April 2026.

The collaboration addresses a challenge facing data centre operators worldwide: as AI workloads grow, traditional air-cooled data centres struggle to manage rising rack densities and heat output. Liquid cooling, particularly direct-to-chip systems, is increasingly seen as a solution to these limitations, offering more precise temperature control and potentially lower energy use.

LiquidStack’s technology delivers cooling directly to the processor, which can improve efficiency in dense server racks. Castrol ON will provide the specialised thermal fluids required to maintain optimal temperatures under these conditions. INNOVO will oversee the modular design and integration of the unit.

Experts note that modular, containerised data centres allow for factory testing and validation, which can shorten deployment timelines and reduce the risk of operational issues after installation. They are also easier to scale, making them attractive for regions with rapidly growing digital workloads.

While the POC is primarily a test and demonstration project, the three companies are exploring broader commercial deployment across the Gulf Cooperation Council (GCC) and the wider Middle East. The region has seen rising demand for AI infrastructure, driven by government digital initiatives, private sector investment, and an increasing reliance on cloud computing.

“The modular, liquid-cooled approach directly addresses the increasing thermal and power demands of AI and HPC servers,” said a regional industry analyst. “It’s a practical step toward more efficient, high-density data centres, particularly in markets where rapid scalability is needed.”

The project also signals the UAE’s ongoing efforts to strengthen its position as a hub for advanced digital infrastructure. The country has been investing in AI, cloud computing, and smart city initiatives, creating demand for data centres that can support modern computing workloads while maintaining energy efficiency.

For a round up of all the news from Capacity Middle East click here.

Related stories

Beyond the fluid: Castrol’s end-to-end vision for liquid cooling in data centres

10 things we learned at Capacity Middle East 2026

HAPPENING NOW: Middle East’s AI and data centre surge spotlighted at Datacloud market address