One of the marquee events of US President Donald Trump’s recent trip to the Middle East was a high-powered lunch at the royal court in Saudi Arabia’s capital Riyadh.
The guest list of those joining Trump and Saudi Crown Prince Mohammed bin Salman caught the eye. Alongside Tesla chief confidante Elon Musk were some of the biggest names in global artificial intelligence (AI) — Nvidia’s Jensen Huang, Sam Altman of ChatGPT parent OpenAI, Google president Ruth Porat and Amazon CEO Andy Jassy, to name a few.
Their collective presence soon made sense, when several US tech firms announced a range of deals with Saudi Arabia on AI funding worth tens of billions of dollars during the Trump visit.
Among the most eye-catching: Nvidia agreed to sell hundreds of thousands of high-end chips to Humain, a new state-back Saudi AI venture unveiled the day before Trump arrived. Meanwhile the chip designer Advanced Micro Devices (AMD) and chipmaker Qualcomm also made major commitments.
China hawks on alert
It comes as Saudi Arabia ramps up investment in artificial intelligence and as the Trump administration seeks to cement US supremacy in machine learning and the production of high-end semiconductors.
Karen E. Young, a Middle East expert at the Columbia University Center on Global Energy Policy in New York, believes the US and Saudi Arabia are natural partners when it comes to artificial intelligence, due to Riyadh’s capacity to build and run data centers.
“They are able to deploy enormous electricity supply from gas and solar power and they do not hesitate in regulatory issues or citing for data centers or power plants and can deploy quickly. This gives them an advantage,” she told DW.
Yet the deal spree has led to criticism in Washington, including from within Trump’s administration. The critics’ argument is that providing high-end chips to Middle Eastern countries could ultimately benefit China in the global race for AI supremacy with the US.
China has deep commercial and political ties in the Middle East and some believe chips sold by the US to the region could end up finding their way to China.
In order to sell AI-capable chips to the Middle East, the Trump administration scrapped rules introduced by former US President Joe Biden towards the end of his time in office in 2024 prohibiting their sale to certain countries, including Saudi Arabia and the United Arab Emirates (UAE).
Companies such as Microsoft and Nvidia had criticized this so-called AI Diffusion Rule, saying it stifled innovation.
However, the widespread fears over possible Chinese access is reflected in the fact that the US House Select Committee on the Chinese Communist Party has introduced new legislation “to stop advanced US AI chips from falling into the hands of adversaries like the Chinese Communist Party (CCP).”
Martin Chorzempa, an expert on China with the Peterson Institute for International Economics, says whether China benefits depends on whether it is “able to access the chips or the models they produce or run.”
“There is a concern that China may be able to either divert the chips themselves or gain access remotely to them,” he told DW.
David Sacks, chair of Trump’s Council of Advisors on Science and Technology and the self-styled White House AI czar, pushed back strongly against criticism that the Gulf deals could benefit China in a post on messaging platform X.
The alternative was to “exclude critical geo-strategic, resource-rich friends and allies from our AI ecosystem,” he wrote, adding: “Every country will want to participate in the AI revolution. If we align with them, we will pull them into our orbit. If we reject them, we will drive them into China’s arms.”
Gulf states get serious about AI
Whatever about China, it is clear that Saudi Arabia and the UAE have major AI ambitions as they look to reduce their economic dependence on oil.
“Saudi Arabia is very serious about AI as a strategic sector for diversification,” said Karen E. Young. “It plays to its assets in abundant energy supply, and it allows the kingdom a bridge to future energy demand.”
She considers the UAE “likely more advanced” in AI development than Saudi Arabia, having pushed it from an earlier date.
Another deal announced during Trump’s Gulf tour saw the US and UAE agree to build the largest AI campus outside the US, with the agreement giving the UAE access to US-made advanced chips.
The UAE has established a technology group called G42 as its main AI outlet, with Microsoft having already invested more than $1.5 billion (€1.34 billion).
For US companies seeking investment, the Gulf states increasingly represent an attractive opportunity given their own enthusiasm to develop and their control of some of the world’s largest sovereign wealth funds.
Humain, the new Saudi vehicle, is entirely owned by the county’s Public Investment Fund (PIF) which has close to $1 trillion at its disposal. The PIF previously launched other AI ventures, while state oil company Saudi Aramco has struck partnerships with US chipmakers Cerebras and Groq.
“These places have two of the most important ingredients to become major AI powers, and are lacking now just computing and talent,” said Martin Chorzempa. “But with enough power, capital, and it appears soon chips, the talent may flock there.”
According to Karen E. Young, access to advanced tech is a “national priority” for Saudi Arabia, and Trump’s willingness to engage as a “transactional issue rather than a security issue or policy challenge” helps that goal.
Yet, while the flurry of investment appears to put the Gulf states on a solid footing to become vital AI hubs of the future, experts believe it is not automatically going to be “win-win.”
Chorzempa, for example, sees a risk that local companies, unconstrained by capital or energy concerns, could develop their own models to compete with the US. He also points to the possibility that China will not necessarily benefit from obtaining the chips themselves, but by sending its people to work in the region and learn.
“One of the most interesting questions is whether Chinese AI talent, which is top-notch and may not be able to come to the United States, can get access to the main ingredient they are missing — chips — by working in the Middle East,” he said. “This will be a key US concern.”
Edited by: Uwe Hessler
