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, among others. Their collective presence soon made sense when several US technology companies announced a number of deals with Saudi Arabia worth $10 billion in AI financing during the Trump visit.
China Hawks on Alarm
It comes as Saudi Arabia increases investments in artificial intelligence, and the Trump administration tries to consolidate the US advantage in machine learning and the production of high-quality semiconductors. Karen E. Young, an expert in the Middle East at Columbia University Center for Global Energy Policy, believes that the USA and Saudi Arabia are natural partners due to Riyadh’s ability to build and operate data centers when it comes to artificial intelligence. However, the deal-spree has led to criticism in Washington, including from the Trump administration, with the argument that providing high-end chips to countries in the Middle East could ultimately benefit China in the global race for AI supremacy.
Concerns Over Chinese Access
China has deep commercial and political relationships in the Middle East, and some believe that chips sold by the United States to the region could find their way to China. The Trump administration scraped rules introduced by former US President Joe Biden that prohibited the sale of such chips to certain countries, including Saudi Arabia and the United Arab Emirates (UAE). Companies like Microsoft and Nvidia had criticized these so-called AI diffusion rules, saying they suffocated innovation. 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 opponents such as the Chinese Communist Party (CCP).
Gulf States’ AI Ambitions
Whatever the concerns about China, it is clear that 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. The UAE is seen as "probably more advanced" in AI development, having driven it up from an earlier stage. 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 Collaboration
The Gulf states are increasingly offering an attractive opportunity for US companies looking for investments, with some of the world’s largest sovereign wealth funds at their disposal. Humain, the new Saudi vehicle, belongs to the kingdom’s Public Investment Fund (PIF), which has nearly $1 trillion at its disposal. The PIF has previously invested in other AI companies, while state oil company Saudi Aramco has met with US chip makers Cerebras and Coq.
Future of AI in the Region
According to Martin Chorzempa, an expert on China at the Peterson Institute for International Economics, the Gulf states have two of the most important ingredients to become important AI hubs: power and capital. With enough of these, talent can flock to the region. However, there are risks that local companies could develop their own models to compete with the US, and that China may not necessarily benefit from gaining the chips themselves but by working with and learning from the population in the region. One of the most interesting questions is whether Chinese AI talent, which is first-class and may not be able to come to the US, can gain access to the main ingredient they lack – chips – by working in the Middle East.
