The UAE and Saudi Arabia have big ambitions to expand their technology sectors via investments in semiconductor and AI capabilities, according to technology experts.
The two GCC countries, the Arab world’s top economies, outlined significant investment plans for AI and semiconductor installations and production. “While spending on AI-led facilities by Microsoft Corp, among others, has been held up by US export regulations, traditional datacentres run by Alibaba Group Holding Ltd and Amazon.com Inc are already operating,” analysts at S&P Global Market Intelligence wrote.
They said the slow build-out can be seen in imports of servers, computers and storage systems of just $3.2 billion in the 12 months to June 30, down by 7.0 per cent year over year. “Should US supplies not be available, firms from mainland China and Hong Kong, which already accounted for 31.8 per cent of supplies of traditional servers, may take the lead,” S&P Global Market Intelligence noted in its report.
The report comes in the wake of a meeting held by leaders of the UAE and the US at which discussions were also centred on key areas like artificial intelligence, renewable energy, climate and space. “Few countries are moving as fast on advanced technologies and artificial intelligence — and as closely in sync with the US — as the UAE,” the UAE Ambassador to Washington, Yousef Al Otaiba, posted on X.
In February, OpenAI CEO Sam Altman said the UAE could serve as the world’s “regulatory sandbox” to test artificial intelligence. Microsoft followed up with a major $1.5 billion investment in the UAE’s top artificial intelligence firm, G42, in April.
BlackRock, Global Infrastructure Partners, Microsoft and the Mubadala-backed MGX investment company also recently announced the Global AI Infrastructure Investment Partnership, underscoring the UAE’s strategic focus on US technology and AI to drive future economic growth.
The S&P report noted that the builders of AI datacentres have to deal with competition for supplies of chips from the global hyperscalers (including Microsoft), whose capital expenditures are expected to rise to $173.3 billion in 2025 from $104.2 billion in 2023.
The UAE and Saudi Arabia also aim to become chip manufacturing centers. Saudi Arabia already has a strategy established with Foxconn Technology Group, while the UAE’s sovereign fund was a co-investor in GlobalFoundries Inc. Yet, both are competing with the US, the EU, Japan and others to attract new investments, the report noted.
The S&P report said access to manufacturing machines is also a challenge, with mainland China accounting for 47 per cent of global imports as its chip firms build out mature technologies, although delays in new projects in Europe may provide a source of supplies. “In the meantime, though, the state-owned funds need to work with private sector chip producers that are in the midst of a long-awaited, but potentially short-lived, cyclical upturn in demand for non-AI systems,” said the report.
Source: www.khaleejtimes.com
