Introduction to AI Investments in the Middle East
One of the marquee events of US President Donald Trump’s most recent trip to the Middle East was a powerful lunch at the Royal Court in Saudi Arabia’s capital, Riyadh. The guest list included Tesla Chief Elon Musk, Jensen Huang from Nvidia, Sam Altman from Chatgpt Parent Openai, Google President Ruth Porat, and Amazon CEO Andy Jassy. Their collective presence soon made sense when several US technology companies announced a number of deals with Saudi Arabia worth $10 billion during the Trump visit.
China Hawks on Alarm
The deal spree has led to criticism in Washington, including from the Trump administration. Critics argue that providing high-end chips to countries in the Middle East could ultimately benefit China in the global race for AI supremacy. China has deep commercial and political relationships in the Middle East, and some believe that chips sold by the US to the region could find their way to China.
US-Saudi Arabia Partnership
The Trump administration scrapped rules introduced by former US President Joe Biden that prohibited the sale of AI-capable chips to certain countries, including Saudi Arabia and the United Arab Emirates (UAE). Companies like Microsoft and Nvidia had criticized these rules, saying they stifled innovation. However, the US House Select Committee on the Chinese Communist Party has introduced new legislation to prevent US AI chips from falling into the hands of adversaries like the Chinese Communist Party.
Gulf States’ AI Ambitions
Saudi Arabia and the UAE have large AI ambitions to reduce their economic dependence on oil. "Saudi Arabia is very serious about AI as a strategic sector for diversification," said Karen E. Young, an expert in the Middle East at Columbia University. The UAE has set up a technology group called G42 as its main AI outlet, with Microsoft already investing over $1.5 billion.
Investment and Development
The US and the UAE have agreed to build the largest AI campus outside the US, granting the UAE access to US-made AI technology. Humain, a new Saudi state-backed firm, has agreed to buy hundreds of thousands of high-end chips from Nvidia. The chip designer Advanced Micro Devices (AMD) and chipmaker Qualcomm have also announced significant commitments.
Risks and Concerns
While the influx of investment seems to be propelling the Gulf states towards becoming important AI hubs, experts believe it will not automatically be a "win-win" situation. There is a risk that local companies, unrestricted by capital or energy constraints, could develop their own models to compete with the US. Additionally, China may not necessarily benefit from gaining the chips themselves but by working with and learning from the population in the region.
Conclusion
The partnership between the US and Saudi Arabia is a significant development in the global AI landscape. While it presents opportunities for growth and innovation, it also raises concerns about the potential risks and challenges, particularly with regards to China’s involvement in the region. As the Gulf states continue to invest in AI, it remains to be seen how this will play out in the global race for AI supremacy.
