If there was ever a sure bet on an investment, the technology that facilitates everything from Artificial Intelligence (AI) to cloud infrastructure might be it. AI is expected to contribute $15.7 trillion to the global economy by 2030 – and the Saudis and Emiratis want a piece of the pie. 

Both oil-rich Gulf states are racing to diversify their economies, and have long used investments in technology and technology companies to do so. Now the pair are going big on semiconductors, the engines of the AI transition.

Semiconductors, or microchips, are the brains of a computer. They are the object that turns a few pieces of metal and plastic into a machine capable of carrying out commands. Today, everything from cars to microwaves to laptops to telephones use semiconductors. And demand is only set to grow for the high-end chips as the use of AI expands.

All over the world, states are scrambling to buy up hard to come by high-end chips as they invest in AI. Fortunately for the UAE and Saudi Arabia, both states have sovereign wealth funds that most states can only dream of – a handy asset in a global purchasing frenzy. 

Reports indicate that Saudi Arabia has already acquired over 3,000 of Nvidia’s H100 chips, which are valued at $40,000 each. That’s a $120 billion bet on the future. The UAE has also reportedly bought thousands of chips. Both countries are expected to continue to buy thousands more every year.

H100 chips, Nvidia says, are designed specifically for training Artificial Intelligence Large Language Models: think ChatGPT and Google’s Bard. But when it comes to owning the highest-end technology, money might not be enough. Both Saudi Arabia and the UAE may be able to buy the highest quality chips by the boatload, but they also need to be able either to train or attract talent with the expertise to use them to their full potential and deliver value for the Gulf economies. And that takes time.

For the UAE, waiting to build up its own expertise base would take far too long. The country may have found a solution, at least for now: using other states’ expertise combined with Emirati cash. The Emirates’ Mubadala-owned G42 Cloud has partnered with US-based AI-focused tech company Cerebras to build a top-end AI supercomputer in the United States. They plan, among other things, to build an Arabic ChatGPT equivalent – no mean feat, based on the intricacy of the Arabic language – and the facility is available for use to researchers from the Mohamed bin Zayed University of Artificial Intelligence in Abu Dhabi. Not only are they immediately getting the opportunity to start making the most of AI, but they’re developing the native expertise in the process.

Saudi Arabia, for its part, has been focusing on microchips themselves, with the goal of building up domestic expertise not only in AI, but on the microchips that enable it. By some metrics, King Abdullah University of Science & Technology is among the world’s best in nanotechnology research, which is key in the building of microchips. The university has launched the Saudi Semiconductor Program, unique to the region, which aims to push further research and development of domestic semiconductor expertise and manufacturing.

Competing in the international market will be difficult. Taiwan’s TSMC dominates the semiconductor manufacturing industry, boasting a 57% global market share, and as much as 90% for the very best two-nanometre chips. Dethroning TSMC looks unlikely for any country, not least Saudi Arabia, which after all is attempting to build a semiconductor industry from the ground up. That is why, like the UAE, the kingdom is pursuing the help of outside experts. To give only one example, King Abdulaziz City for Science and Technology has signed Memorandums of Understanding with Chinese chip manufacturers China Electric Power Equipment and Technology and Beijing GL-Microelectronics Technology Co. to establish a center for designing and manufacturing microchips in the Kingdom.

In many ways, both the Saudis and the Emiratis are pursuing the same strategy: throw money at the problem and call on the help of friends. This is a tactic that has worked for them in the past. Both countries’ booming hydrocarbon industries were the result of the steady domestication of foreign drilling expertise, repurposed, reclaimed, and renationalised to the benefit of the state. Today, the gulf states boast not only world-leading hydrocarbon infrastructure, but also second-to-none expertise in adjacent sectors such as petrochemicals and even shipping.

Following this model, Saudi Arabia and the UAE’s bet to become leaders in AI may well pay off more than many are expecting it to. The road will be long and arduous, but do not write them off.