Saudi Arabia influences the global race for AI investment

Moreover, the Kingdom will invest $20bn in government funds to support such aims as incubating 300 startups by 2030.

As part of its concerted efforts to catalyse a quantum leap in AI and drive broader digital transformation, the Kingdom is poised to cultivate a thriving digital economy.

A report by PricewaterhouseCoopers anticipates that AI will soon contribute 2.4% to Saudi Arabia's GDP and inject $135bn into its economy by 2030, underscoring the transformative potential of these initiatives.

The onward thrust was propelled when The New York Times unveiled discussions aimed at establishing a monumental $40bn fund earmarked for AI investments.

This could involve a partnership between Saudi Arabia's Public Investment Fund (PIF) and Andreessen Horowitz, one of Silicon Valley's preeminent investment firms, alongside other financiers, with collaboration by Wall Street banks.

An AI arms race

This collaboration puts the Kingdom's amongst the global technological superpowers and amplifies its influence beyond the region.

These industries are subject to fierce competition among major nations, notably the United States and China, while Japan, India, and the European Union are big players.

In some ways, it is an arms race towards transformative technology.

For evidence, witness the historic surge in value of US chip company Nvidia and the intense competition among tech giants to invest in the chip and semiconductor industry.

Ever since OpenAI opened the public's eyes to the power and potential of GenAI in November 2022, companies and countries have urgently sought to position themselves.

As the Kingdom aims to invest in chipmaking and large-scale data centres, its level of investment rivals that of the two tech powerhouses—the US and China.

It also surpasses the levels of European states such as the UK, Germany, France, and Spain, which are largely still in the process of refining their strategies and assessing their investments for the forthcoming years.

Riyadh's investments may include the tech giants such as Google, Microsoft, Intel, and Amazon, but its partnership with Andreessen Horowitz will help it invest in others.

Andreessen Horowitz, which may open an office in the Saudi capital, boasts a track record of backing companies like Airbnb, Coinbase, Facebook, and Slack, with its portfolio of around 100 leading AI startups.

The Saudi digital economy has exhibited robust growth rate of 10.3% in recent years, from $111bn in 2021 to $123bn in 2023, according to the Saudi Communications, Space, and Technology Commission.

Positioning for the future

The Kingdom remains convinced that AI will revolutionise industries, enhance efficiency, attract investment, bolster competitiveness, foster innovation, create jobs, improve public services, and elevate the overall quality of life for its citizens.

On this belief, PIF launched a new company called Alat in early February, endowed with a staggering $100bn for investments.

Its aim is "to create a national champion that will contribute to the aim of making Saudi Arabia a global hub for sustainable technology manufacturing that focuses on advanced technologies and electronics".

One of its primary objectives is to bolster the electronic chip sector, specifically graphics processing units (GPUs), the type of chips used to train AI models, and factories to make them.

Notably, the Kingdom announced a strategic partnership with Japan's mammoth tech-investment holding company SoftBank, which recently established a semiconductor manufacturing firm.

A Goldman Sachs report published in August highlighted the huge transformations needed in physical, digital, and human capital for companies to adopt new technologies and restructure their business processes at a cost of around $200bn by 2025.

Saudi Arabia's investments lay the groundwork for the forthcoming phase as outlined in the report and means that technology firms will find the Kingdom fertile ground for innovation and expansion.

This includes training and developing AI models, data centres, cloud infrastructure, and chip manufacturing facilities.

AI comes to Riyadh

Saudi Arabia boasts a pool of young, skilled, and motivated technicians, researchers, and developers, as showcased at the monumental LEAP conference, now in its third edition, held in Riyadh in March.

Attracting 200,000 visitors from 180 countries, including 1,300 investors, the conference underscored Riyadh's status as a global hub for technology innovation.

The city's hotel occupancy rates soared to an unprecedented 99% during the event.

The conference kicked off with the announcement of $1bn for a Generative AI Accelerator (GAIA).

This will be a collaboration between the Saudi Data and Artificial Intelligence Authority (SDAIA) and the US-based global AI community NewNative, among others.

An impressive $13.4bn was invested in technology at this year's LEAP conference, up from $9bn last year. This 32% increase came despite a global investment downturn.

Among the more notable initiatives unveiled was Aramco Digital's pioneering GenAI model in the industrial sector.

It also revealed its intention to collaborate with Grok, a GenAI chatbot developed by Elon Musk's xAI.

The purpose would be to establish perhaps the world's largest AI computing centre to create an ultra-large-capacity cloud in Saudi Arabia, possibly surpassing Amazon Web Services' $5.3bn investment.

Additionally, Google Cloud, Google's cloud computing arm, expects its Saudi region to contribute about $110bn to the Saudi economy over the next seven years, creating about 150,000 jobs.

Launched last November, the cloud's region serves as a boon for some 1.2 million small- to medium-sized enterprises (SMEs) in the Kingdom.

A further $5bn investment in data centre construction, software development, and manufacturing was announced by DataVolt, which intends to construct sustainable and innovative data centres in Saudi Arabia with a capacity of more than 300 megawatts.

Other investments were announced by ServiceNow ($500mn), Dell Technologies, and IBM, the latter planning to invest over $200mn in talent and infrastructure by establishing a new software centre in Riyadh.

Harnessing the economy

According to PwC Middle East, the Kingdom had the world's 17th largest GDP in 2022, with output having surpassed $1tn for the first time. The International Monetary Fund projects that this will grow to $1.3tn by 2028.

The sustained strength of the Saudi economy, coupled with the government's strategic investments in technological innovation, has inspired company leaders to embrace technologies such as GenAI.

They recognise its potential to enhance the quality of their products and services, thus driving business growth, but know that this will necessitate the development of new skills among the workforce over the next three years.

SDAIA's establishment underscores the Kingdom's commitment to solidifying its position among the leading nations in the field of AI globally.

Headquartered at the prestigious King Abdullah University of Science and Technology, it is tasked with the ambitious goal of training 25,000 specialists in data and AI by 2030.

Through this, SDAIA plays a pivotal role in addressing the pressing need for highly skilled professionals at the cutting edge of AI advances.

Given the urgent demand for exceptional talent, the Kingdom has engaged 300,000 high school students and younger people through digital training courses focused on AI and programming.

It aims to equip young minds with the necessary skills to thrive in a new era of economic and social development, empowering them to contribute meaningfully to the realisation of a tangible, sustainable, and systematic transition to the digital economy.

Offering opportunities

Beyond investments and training, the Kingdom is also committed to attracting the world's top talent by offering prestigious residencies to leaders in their fields.

Among the opportunities for the world's best and brightest will be the new city of NEOM, where AI serves as the cornerstone, aiming to establish a unique global model for sustainability through advanced smart digital technologies.

The Line, which is the urban living part of NEOM, will rely entirely on AI throughout its construction and operation, as highlighted by NEOM chief executive Giles Pendleton.

Furthermore, the Red Sea Project exemplifies the Kingdom's commitment to leveraging smart systems to monitor environmental impacts and enhance visitor experiences in new tourist areas.

In tandem with the rapid advance of technology, Saudi Arabia is at the forefront of the concurrent debate around AI governance and ethics.

The Kingdom was among the first countries to embrace the AI ethics recommendations endorsed by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) in November 2021, with the participation of 193 countries.

Subsequently, in September 2022, the principles of AI ethics were formally launched during the second edition of the Global AI Summit.

Stamp of approval

In a significant development, the Saudi Council of Ministers approved the establishment of the International Centre for AI Research and Ethics in Riyadh in July 2023.

To many, this underscored the Kingdom's commitment to fostering responsible AI development and deployment on a global scale.

SDAIA has been proactive in establishing a legislative and regulatory framework encompassing all data-related controls and standards, thereby bolstering their reliability and quality.

This puts Saudi Arabia ahead of similar developments in Europe, where the European Parliament passed the Artificial Intelligence Law last month.

This legislation prohibits systems that pose risks associated with the use of biometric data linked to sensitive personal information and introduces controls for GenAI models like ChatGPT. Silicon Valley is likely to follow the EU's lead.

Evidencing its commitment and capabilities in the field of AI, the Kingdom now ranks top globally in terms of government AI strategy, according to the Global AI Index.

This remarkable accomplishment places Saudi Arabia ahead of formidable contenders like Germany and China.

It underscores the nation's dedication and genuine potential to spearhead innovation and economic growth through its AI initiatives.