Originally one of the regulated export destinations for US chips, Saudi Arabia aims to receive clearance from the US government in 2025 and obtain US-manufactured high-quality chip supplies such as the Nvidia H200.
Currently, Saudi Arabia is making big investments in cultivating its computing power and AI development, aiming to raise AI contribution to gross domestic product (GDP) to 12% by 2030.
Deputy CEO of SDAIA's strategy management office Abdulrahman Tariq Habib told CNBC at the Global AI Summit that the United States is considering easing regulations as an indication of the countries' positive relationship in the AI area. He is optimistic that Saudi Arabia will be able to obtain these chips in 2025.
Habib stressed that it "will mean a lot" for Saudi Arabia to have access to these high-quality chip supplies. It would advance commercial transactions between Saudi Arabia and the United States as well as pave the way for the establishment of Saudi Arabia's computing power. Computing power is not the only important aspect. Saudi Arabia has also put in a lot of effort into areas including talent resources and informational power over the last three years.
Saudi Arabia has been investing considerably in the development of its local AI ecosystem. According to a report by SDAIA in September, Saudi Arabia's Vision 2030 aims to have AI make up 12% of its GDP by 2030. To achieve this goal, Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), will be responsible for investments.
According to The National's quote of an analysis report by PwC, with investments in Generative AI (GenAI) continuing to grow, the six countries in the GCC are estimated to achieve an economic benefit of US$23.5 billion per year, with Saudi Arabia contributing the most with US$12.2 billion.
Geopolitics between US, China forcing countries to pick technical sides
The US government has implemented a series of chip-related export regulations targeted towards China. In May 2024, these regulations expanded to include many Middle East countries including Saudi Arabia and the United Arab Emirates. One of the reasons is that the US government is worried that China would obtain these chips through Middle East countries it has close interactions with. China is Saudi Arabia's biggest trading partner and an important investor in Saudi Arabia's Vision 2030.
With geopolitics intensifying between China and the United States, key technical areas including AI and semiconductors have also become critical points of rivalry between the two, making other countries pick sides to a certain extent. Alat, a semiconductor and AI investment institution supported by hundreds of billions in US dollars by PIF, had expressed a similar stance.
Bloomberg reported that Alat CEO Amit Midha had clearly stated, that the requests received thus far required a complete separation between the manufacturing process and supply chain (China). If the partnership with China creates doubt in the United States, then the relationship will be terminated. He also stressed that the United States is not only Alat's first-choice partner but also its first-choice market.
However, according to Semafor's recent quote from a source's analysis, although Saudi Arabia's government has already taken action by limiting transactions with China-based businesses if the US government insists on blocking the export of US-manufactured high-end chips, Saudi Arabia may still end up opening its doors to China.
