Can the Gulf states become tech superpowers?

Few middle powers have the towering technological ambitions of the rich Gulf states. As they seek to shift their economies away from fossil fuels, the Emiratis want to lead the world in artificial intelligence (AI) and the Saudis want the kingdom to become home to startups in cutting-edge areas such as robotics. Those aspirations, however, are about to collide with geopolitical reality.

The fascination with tech is not new, but the scale of the plans is. In March the United Arab Emirates (UAE) created MGX, a tech-investment company with a target size of $100bn, which will invest in AI infrastructure, such as data centres and chips. It has also set up a $10bn AI venture-capital fund. In Saudi Arabia a number of different funds with a combined firepower of $240bn will splurge on AI, data centres and advanced manufacturing. 

The rulers are making bets in three areas. One is model-making and applications.  The Gulf’s companies are also beefing up the region’s infrastructure.  Gulf companies are building data centres abroad, too.  A third area is chip manufacturing, which the UAE seems especially keen on.

There are early signs the strategy could come together. The total capacity of all data centres currently in construction in Saudi Arabia and the uae has grown about ten-fold in the past five years. Investment has flowed in. The Gulf recorded almost $8bn of foreign direct investment in tech infrastructure and another $2bn in software in 2024, up three-fold from 2017, according to fDi Markets, a data firm. Talent is moving, too. BCG, a consultancy, says that the AI talent pool in the UAE and Saudi Arabia has grown by over one-third and almost a fifth, respectively, since 2022.

But a big risk looms over the Gulf’s ambitions: souring relations between America and China. The rulers have leaned heavily on America’s big technology firms for partnerships. At the same time, they have struck plenty of deals with large Chinese firms.  American policymakers are clearly wary of this relationship. 

Geopolitical tensions are likely to intensify during Mr Trump’s second term. America’s tech giants already see themselves in a race with China. If the Gulf’s rulers want their tech dreams to materialise, they may eventually be forced to pick a side.