Artificial Intelligence – The Middle East

Plenty of space, electricity and money

• The visit of the US President to the Middle East has intensified the friendly competition between Saudi Arabia and the UAE, both of whom intend to become global AI hubs.
• The President’s visit coincides with a Saudi-US Investment Forum where a slew of deals have been announced that look set to give the region all the resources it needs to execute its vision.
• The region has the advantage of having plenty of space, plenty of electricity and plenty of money to invest, and those that build data centres have informed me that the summer heat is only a minor inconvenience.
• The main headline is the formation of a new AI company called Humain that will be owned by the Public Investment Fund (PIF) of Saudi Arabia and will be responsible for creating AI technologies and infrastructure.
• Humain will also invest and I suspect that a lot of the investment that the USA is looking for will be made via Humain.
• The US corporate sector was quick to react and Nvidia, AMD, Qualcomm, Amazon, Cisco and OpenAI all made announcements where they will be working with Humain to develop AI in Saudi Arabia and, of course, supply their products.
• The UAE already has entities like Humain, but its entities exist as two government-owned companies rather than one.
• These are G42, which creates and operates AI businesses and MGX, which is an investor in AI infrastructure and businesses.
• I suspect that there are a lot more deals to be announced as the US President will also be visiting the UAE and Qatar as part of his trip.
• Key to these announcements is the reassessment of the AI Diffusion rule (see here), which would have greatly limited the number of AI chips that can be sold into the region for fear of their re-export to China.
• Nvidia has already announced the supply of several hundred thousand advanced processors over the next 5 years, while OpenAI plans to build data centre capacity in the region which would not be possible under the AI Diffusion rule.
• I suspect that when the new rule is drafted, it will still put very strict restrictions on what can be exported to China, but will be much more lenient when it comes to other countries.
• This, of course, will require promises that the re-export of chips will cease, and in Saudi Arabia and the UAE’s case, I don’t think that this will be a problem.
• This is because almost all of the AI investment in the region is being made by sovereign-controlled entities, meaning that the promises will be backed by the personal guarantee of the region’s leaders.
• Furthermore, Microsoft’s investment in G42, while still being frowned upon by some in Washington, has lent the UAE much greater credibility in its stated intentions of pivoting towards the USA and away from China.
• However, while the UAE and Saudi Arabia are laying the groundwork to become global centres of technology and AI, what they both really need is the private sector.
• Virtually all of the investments being made are being done so with government money, which will get development started, but it is the private sector that will build the ecosystem and allow the strategy to succeed.
• There are already early signs of this in the UAE which has gone out of its way to create the right environment and already, a significant number of financial investors are setting up in the region.
• There are also some examples of technology entrepreneurs coming to the region to start companies (eg Analog.io) but much more is needed if the region is to earn a place on the technology landscape.
• The biggest problem to date has been finding talent, but a combination of liberalisation in the region as well as more citizens looking to relocate from Europe, China and Russia, are steadily rectifying this problem.
• Consequently, the outlook for the Middle East (UAE and Saudi Arabia in particular) is steadily improving but it is going to take time.
• I think that the region most at risk of losing momentum to the Middle East is Europe, where AI is already languishing and where the EU is attempting to regulate an industry before it exists.
• Many companies are already deciding not to launch their AI products in Europe, which is a sign to any entrepreneur that you are better off founding your AI company elsewhere.
• The Middle East is flinging its doors wide, and I suspect that these entrepreneurs will increasingly decide to base themselves in the region.