‘To the Future’: Saudi Arabia spends big to become an AI superpower

More than 200,000 people converged at the conference, including Adam Selipsky, CEO of Amazon’s cloud computing division, who announced a $5.3 billion investment in Saudi Arabia for data centers and artificial intelligence technology.
Last Updated : 25 April 2024, 04:59 IST
Last Updated : 25 April 2024, 04:59 IST

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Riyadh, Saudi Arabia: On a Monday morning last month, tech executives, engineers and sales representatives from Amazon, Google, TikTok and other companies endured a three-hour traffic jam as their cars crawled toward a mammoth conference at an event space in the desert, 50 miles outside Riyadh, Saudi Arabia.

The lure: billions of dollars in Saudi money as the kingdom seeks to build a tech industry to complement its oil dominance.

“To the Future,” a sign read on the approach to the event, called Leap.

More than 200,000 people converged at the conference, including Adam Selipsky, CEO of Amazon’s cloud computing division, who announced a $5.3 billion investment in Saudi Arabia for data centers and artificial intelligence technology. Arvind Krishna, the CEO of IBM, spoke of what a government minister called a “lifetime friendship” with the kingdom. Executives from Huawei and dozens of other firms made speeches. More than $10 billion in deals were done there, according to Saudi Arabia’s state press agency.

“This is a great country,” Shou Chew, TikTok’s CEO, said during the conference, heralding the video app’s growth in the kingdom. “We expect to invest even more.”

Everybody in tech seems to want to make friends with Saudi Arabia as the kingdom has trained its sights on becoming a dominant player in AI— and is pumping in eye-popping sums to do so.

Saudi Arabia created a $100 billion fund this year to invest in AI and other technology. It is in talks with Andreessen Horowitz, a Silicon Valley venture capital firm, and other investors to put an additional $40 billion into AI companies. In March, the government said it would invest $1 billion in a Silicon Valley-inspired startup accelerator to lure AI entrepreneurs to the kingdom. The initiatives easily dwarf those of most major nation-state investments.

The spending blitz stems from a generational effort outlined in 2016 by Crown Prince Mohammed bin Salman and known as “Vision 2030.” Saudi Arabia is racing to diversify its oil-rich economy in areas like tech, tourism, culture and sports— investing a reported $200 million a year for soccer superstar Cristiano Ronaldo and planning a 100-mile-long mirrored skyscraper in the desert.

For the tech industry, Saudi Arabia has long been a funding spigot. But the kingdom is now redirecting its oil wealth into building a domestic tech industry, requiring international firms to establish roots there if they want its money.

If Crown Prince Mohammed succeeds, he will place Saudi Arabia in the middle of an escalating global competition among China, the United States and other countries like France that have made breakthroughs in generative AI. Combined with AI efforts by its neighbor, the United Arab Emirates, Saudi Arabia’s plan has the potential to create a new power center in the global tech industry.

In Washington, many worry that the kingdom’s goals and authoritarian leanings could work against US interests— for instance, if Saudi Arabia ends up providing computing power to Chinese researchers and companies. This month, the White House brokered a deal for Microsoft to invest in G42, an AI company in the UAE, which was intended partly to diminish China’s influence.

For China, the Persian Gulf region offers a big market, access to deep-pocketed investors and a chance to wield influence in countries traditionally allied with the United States.

Some industry leaders have begun to arrive. Jürgen Schmidhuber, an AI pioneer who now heads an AI program at Saudi Arabia’s premier research university, King Abdullah University of Science and Technology, recalled the kingdom’s roots centuries ago as a center for science and mathematics.

“It would be lovely to contribute to a new world and resurrect this golden age,” he said. “Yes, it will cost money, but there’s a lot of money in this country.”

The university, known as KAUST, has become a site of the US-Chinese technological showdown.

Modeled on universities like the California Institute of Technology, KAUST is the kingdom’s premier scientific research school, bringing in foreign AI leaders and providing computing resources to build an epicenter for AI research.

To achieve that aim, KAUST has often turned to China to recruit students and professors and to strike research partnerships, alarming US officials. They fear students and professors from Chinese military-linked universities will use KAUST to sidestep US sanctions and boost China in the race for AI supremacy, analysts and US officials said.

Of particular concern is the university’s construction of one of the region’s fastest supercomputers, which needs thousands of microchips made by Nvidia, the biggest maker of precious chips that power AI systems. The university’s chip order, with an estimated value of more than $100 million, is being held up by a review from the US government, which must provide an export license before the sale can go through.

Schmidhuber is awaiting the completion of the supercomputer, Shaheen 3, which is a chance to attract more top talent to the Persian Gulf and to give researchers access to computing power often reserved for major companies.

“No other university is going to have a similar thing,” he said.

Some in Washington fear the supercomputer may provide researchers from Chinese universities access to cutting-edge computing resources they would not have in China. More than a dozen students and staff members at KAUST are from military-linked Chinese universities known as the Seven Sons of National Defense, according to a review by The New York Times.

Schmidhuber said the Saudi government was ultimately aligned with the United States. Just as US technology helped create Saudi Arabia’s oil industry, it will play a critical role in AI development.

“Nobody wants to jeopardize that,” he said.

Saudi Arabia was once viewed as a source of few-strings-attached cash. Now it has added conditions to its deals, requiring many companies to establish roots in the kingdom to partake in the financial windfall.

That was evident at GAIA, an AI startup accelerator, for which Saudi officials announced $1 billion in funding last month.

Each startup in the program receives a grant worth about $40,000 in exchange for spending at least three months in Riyadh, along with a potential $100,000 investment. Entrepreneurs are required to register their company in the kingdom and spend 50 per cent of their investment in Saudi Arabia. They also receive access to computing power purchased from Amazon and Google free of charge.

About 50 startups— including from Taiwan, South Korea, Sweden, Poland and the United States, have gone through GAIA’s program since it started last year.

“We want to attract talent, and we want them to stay,” said Mohammed Almazyad, a program manager for GAIA. “We used to rely heavily on oil, and now we want to diversify.”

One of the biggest enticements for AI startups is the chance to make the deep-pocketed Saudi government a customer. In one recent meeting, Abdullah Alswaha, a senior minister for communications and information technology, asked GAIA’s startups to suggest what they could provide for the Saudi government. Afterward, many of the companies received messages introducing them to state-owned businesses, Almazyad said.

Deciding to set up in Riyadh comes with challenges. There’s the heat, reaching more than 110 degrees in the summer, as well as the adjustments of moving to a deeply religious Muslim kingdom. While Saudi Arabia has loosened some restrictions in recent years, freedom of speech remains limited and LGBTQ people can face criminal penalties.

Almazyad said cultural differences could make it hard to recruit international AI talent. But he cautioned against underestimating Saudi Arabia’s resolve.

“This is just the beginning,” he said.

Published 25 April 2024, 04:59 IST

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