Saudi Arabia willing to drop China for US tech alliance

Reuters

• US says ‘it’s us or China’
• Multi-million dollar partnerships at risk
• Fears over access to technology

Saudi Arabia will sever technology ties with China if the United States compels it to, the chief executive officer of Alat, an investment company backed by $100 billion in capital from the Public Investment Fund, has revealed.

According to Bloomberg US officials have told their Saudi Arabian counterparts that they will have to decide between US and Chinese technology, in order to develop the kingdom’s semiconductor industry.

Alat’s CEO, Amit Midha, said in an interview with Bloomberg News that requests so far from the US have been to keep manufacturing and supply chains completely separate. If the partnerships with China became a problem, Alat may divest its $100 billion AI fund of its links with China.

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“The US is the number one partner for us and the number one market for the AI, chips and semiconductor industry,” Midha said, speaking to Bloomberg during the Milken Institute Global Conference in California. “We are seeking trusted, secure partnerships in the US.”

The company struck deals earlier this year to create factories to build industrial robots and surveillance products, including a $200 million partnership with China’s Dahua Technology.

• China dominates Saudi trade in Q1 as ties strengthen

• Saudi Arabia and China strengthen ties with extra flights

• Saudi-US trade banks sign deal despite kingdom’s China links

It also partnered with international technology companies such as Japan’s Softbank Group, the US-headquartered Carrier Corporation, China’s Dahua Technology and the Saudi Technology and Security Comprehensive Control Company to promote carbon-zero manufacturing.

Saudi Arabia is aiming for regional technological leadership, hoping to establish data centres, AI enterprises and semiconductor production facilities. 

However, the US is increasingly scrutinising the Middle East’s connections to China.

Concerns arise over nations such as Saudi Arabia and the UAE potentially serving as channels for Beijing to access restricted technology.

The US has previously urged the Abu Dhabi-based AI company G42 to divest from Chinese technology, in exchange for continued access to US systems that power AI applications. 

The agreement paved the way for Microsoft’s $1.5 billion investment in G42.

The US has also tightened restrictions on technology exports to Huawei Technologies, the Chinese digital communications technology conglomerate, over national security concerns, the Financial Times reported on Wednesday.

Washington already has tough restrictions on the sale of US technology to Huawei, but Republican politicians have urged President Joe Biden to take even tougher action against the Chinese company, which national security officials say helps Beijing engage in cyber espionage around the world, the report added.

Huawei has denied the claims.

InvestHK visits Dubai

Meanwhile, a 40-strong delegation from InvestHK – the department of the Hong Kong special administrative region’s government responsible for foreign direct investment – has been in the UAE this week looking to strengthen ties between companies based in the Chinese mainland who operate through Hong Kong and the Gulf country.

King Leung, head of financial services and fintech at InvestHK, told AGBI he had no concerns over potential boycotts of Chinese entities.

“At the end of the day, we see ourselves as the enabler for the private sector folks to do business,” he said. 

“Yes, there’s the political rhetoric, but then the business leaders, they make their own decisions.”