Saudis plan US$100 billion AI powerhouse to rival UAE tech hub

SAUDI Arabia is planning a new artificial intelligence (AI) project with the backing of as much as US$100 billion as it seeks to develop a technological hub to rival the neighbouring United Arab Emirates (UAE), sources familiar with the matter said.

The state-backed entity will invest in data centres, startups and other infrastructure to develop AI, the sources said, asking not to be identified as discussing plans that are not yet public. The initiative, called “Project Transcendence” will also focus on recruiting new talent to the kingdom, developing the local ecosystem and encouraging tech companies to put resources in the country, they said.

Such a company would build on the already massive efforts that Saudi Arabia has made to establish itself as a global force for AI development. It would be set up with a structure similar to Alat, a fund focused on sustainable manufacturing and backed by US$100 billion in capital from the kingdom’s Public Investment Fund (PIF), the sources said. Alat is chaired by Crown Prince Mohammed bin Salman and seeks to co-invest with large, international companies.

The Saudi government did not immediately respond with a request for comment.

An AI hub being built by Saudi Arabia’s PIF and Alphabet’s Google may serve as the starting point for a broader initiative, the sources said. The companies are planning to invest between US$5 billion and US$10 billion in the partnership, which will include work on creating Arabic language AI models, one source said. Alphabet shares gained 4 per cent on Wednesday to US$176.51.

Project Transcendence would aim to team up with large, established tech companies, with the Saudis offering help with infrastructure and capital, the sources said. Ultimately, the amount invested could be US$50 billion to US$100 billion, they said.

The project may ultimately include multiple government bodies and will be aimed at funding AI infrastructure and startups, as well as bridging the kingdom’s gap with the US and China on AI expertise, one of the sources said.

Saudi officials have told others that the kingdom is envisioning an AI entity that would be a national champion, at least as big as Abu Dhabi’s G42 tech conglomerate, according to sources familiar with the talks.

AI is part of Saudi Arabia’s Vision 2030 strategy, which aims to identify new revenue sources as the Gulf state diversifies away from fossil fuels. Its goal is to become a top 15 country in AI by spending the rest of this decade adopting the technology at home and then exporting it from 2030. The kingdom has launched major research centres and ministries devoted to AI and produced large-language models similar to OpenAI’s ChatGPT.

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Still, one of the Crown Prince’s other mega-projects, the trillion US dollar Neom development, is facing funding cutbacks as the kingdom projects years of budget deficits, Bloomberg News has reported.

PIF was separately in early talks to partner with venture capital giant Andreessen Horowitz on a fund, which may grow to as large as US$40 billion in commitments, to target AI investments, sources familiar with the matter said in March. The PIF aimed to initially run the new fund and would be among investors contributing to it, the sources said, asking not to be identified discussing private information. BLOOMBERG