US President Donald Trump’s first Gulf trip in his second term of office did not disappoint, especially for the architects of the artificial intelligence (AI) strategies in Saudi Arabia and the UAE.
The chief executives of the largest US chip manufacturers, Nvidia and AMD, accompanied Trump during the visit, in which the most awaited announcements came through.
The US and the UAE broke ground on the 1GW first phase of a sprawling 5GW AI campus that will eventually occupy 25 square kilometres of land in Abu Dhabi.
Abu Dhabi government-backed AI firm G42 will build the AI campus, which will be operated in partnership with “several US companies”, presumably the major hyperscalers including Amazon Web Services, Google and Microsoft.
The announcement fell short of confirming the specific volume of advanced graphics processing units (GPUs) that will be required by the AI complex, which will be the largest outside of the US when completed. Many news outlets had bet that Nvidia was to commit to supplying the UAE with 500,000 of its most advanced GPUs annually starting this year.
Using today’s average cost-per-MW in constructing data centres, the project capex could easily reach $50bn.
In Riyadh, the deals were relatively smaller, though equally significant, and offered more details than those announced in Abu Dhabi.
The newly formed Humain, owned by sovereign wealth vehicle, the Public Investment Fund (PIF), signed preliminary deals with AMD and Nvidia to build multibillion-dollar advanced digital infrastructure in the kingdom.
AMD said it will invest up to $10bn to deploy 500MW of AI compute capacity in Saudi Arabia over the next five years. Nvidia agreed to develop a similar compute capacity to build AI factories in Saudi Arabia, which will require “several hundred thousand” of Nvidia’s most advanced GPUs over the next five years.
These deals help address fears that US export controls on advanced US-made GPUs could stifle both states’ ambitious programmes to use AI to help diversify their economies away from hydrocarbons, while also future-proofing the hydrocarbons sector, their main economic growth engines thus far, by lowering emissions.
Tellingly, the US State Department said the UAE facility will “leverage nuclear, solar and gas power to minimise carbon emissions and will also house a science park driving advancements in AI innovation”, a clear reference to a joint policy to alleviate these assets’ environmental impact.
Abu Dhabi is already developing an energy infrastructure – comprising solar photovoltaic, battery energy storage systems, gas-fired plants and grid infrastructure – requiring close to $10bn of investments that will cater mainly to its AI strategy. Saudi Arabia is constructing 30GW of gas-fired and 16.4GW of solar and wind capacity in line with its energy diversification and 2030 renewable energy targets. Part of this capacity may help address the energy requirements of future AI facilities.
From a certain vantage point, there is nothing not to like in these deals, with AMD and Nvidia shares trading higher over the past few days.
It provides a clear picture of what the Gulf’s two largest economies want for themselves as they seek to preserve their status as energy hubs, this time powered by clean energy and innovation, and create new revenue streams, hopefully without alienating their largest energy client, China.
Photo credit: Wam