Tech

Saudi Arabia campaign aims to attract chipmakers

June 6, 2024

Workers at a semiconductor factory. Saudi Arabia wants global semiconductor design companies to set up in the kingdom

National Semiconductor Hub established
Bid to reduce reliance on imports
Training programme part of scheme

Saudi Arabia has launched a National Semiconductor Hub in a bid to attract international chipmakers.

The kingdom is targeting at least 50 semiconductor design companies to set up business by 2030, aiming to cut its reliance on imported computer chips.

The global semiconductor industry, once plagued by shortages, is now showing signs of recovery and this trend is expected to continue.

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Industry analysts at US consultancy Precedence Research predict that the global semiconductor market, valued at $545 billion in 2023 will reach $1 trillion in 2033.

Taiwan remains the world’s leading chip producer followed by South Korea, China and the US.

Saudi Arabia’s initiative was announced during the Future of Semiconductors Forum in Riyadh and is supported by a venture capital fund valued at around SAR1 billion ($266 million).

There are plans to offer a premium residency programme to draw over 25 experts in the field.

Education will also be part of the strategy, aiming to train 5,000 engineers in chip design by the end of the decade.

“The hub will [not only] build the knowledge required for this industry,” said Dr Mohammed Alotaibi, acting head of the Research Development and Innovation Authority, “but also promote Saudi Arabia as an attractive relocation country for international semiconductor design companies.”

Speaking at the forum, Ross Jatou, president of Alat Semiconductors, a subsidiary of the state-backed Public Investment Fund, emphasised the growing importance of semiconductors. Traditionally used in processors, their presence is now in everyday devices like phones and cameras.

The forum, co-organised by the kingdom’s King Abdulaziz City for Science and Technology and King Abdullah University of Science and Technology, hopes both to import expertise and localise chip production.

Saudi Aramco’s venture capital fund Prosperity7 last month joined a $400 million investment round for Chinese generative AI startup Zhipu AI.

Prosperity7 is a minority investor in Zhipu, which is valued at nearly $3 billion, the Financial Times reported on Friday.

This marks the first instance of foreign investment in China’s quest to establish a homegrown rival to OpenAI.

It also reinforces Saudi Arabia’s intention to diversify AI ecosystems away from US dominance.

US restrictions on the AI sector and tightened export controls on high-end chips used in AI models mean that Chinese startups, including Zhipu, are seeking support from foreign investors.

Geopolitical tensions have intensified competition over tech, prompting Washington to restrict China’s access to semiconductors.

The US has also pressured nations to refrain from backing China’s tech sector via investments or exports.

Sales of chips are already curtailed in China and Russia. Last year the Biden administration also blocked sales of some of Nvidia’s most valuable products to the Middle East to block potential re-export.

Abu Dhabi’s G42, which is leading the UAE’s charge into AI and associated technologies, has sought to distance itself from China, thought to be a prerequisite for securing a $1.5 billion investment from Microsoft.

However, Alat 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 the Republic, he added.