Overview

Saudi Arabia’s (KSA’s) attempt to turn from one of the least to most developed data markets in the world has advanced with measures it and the US have taken to encourage investors to build artificial intelligence (AI) data centers in the country.

KSA came closer to finalizing plans to treat foreign computer systems as “data embassies”, reassuring firms their customer data would be safely stored in the authoritarian Gulf monarchy. Meanwhile, the US scrapped export controls on its most advanced AI chips, which had threatened to stop KSA from ever realizing its plan to become a global leader in AI.

Those legal preparations bore fruit this week before either was actually enacted, when Nvidia, whose advanced AI chips are the subject of US export controls, said it had done a deal to ship 18,000 of them to the Saudi state-owned Public Investment Fund. The chips were the first stage in a plan to install “several hundred thousand” Nvidia Grace Blackwell AI chips in five years, consuming 500MW of energy.

Political analysts and industry insiders said, before KSA’s plans unfurled this week, that its proposed Global AI Hub Law would allow KSA to get banned AI chips that both it and foreign firms would need to build AI systems in the country. The draft law offers to give foreign computer systems embassy status, so their operators answered only to the laws of their home nations. It would forbid the Saudi state from intruding.

KSA concluded a public consultation on the law the day after an Investment Summit, at which US president Donald Trump and Saudi crown prince Mohammed bin Salman Al Saud signed a broad economic partnership and presided over $600bn of trade deals, the White House said in a statement. They had done $300bn of deals when the conference opened, and aspired to $1tn, the prince told the conference on Tuesday. The deals encompassed defence, energy, tech and health.

The audacity of KSA’s ambition was made apparent by data that in February, according to Computer Weekly analysis, showed how among 20 of the most notable data markets in Europe, the Middle East and Africa (EMEA), Saudi capital Riyadh had the second-least of all operational, planned and unfinished data centers, above only Athens.

With 125MW of computing capacity then planned in Riyadh, it was barely 5% of the forecast size of EMEA market leader London, and not 15% of the size of its rival and neighbour, the United Arab Emirates, according to numbers published by commercial estate agent Cushman & Wakefield. The largest data center investment deal apparent, among those announced at the Forum, was Saudi firm Data Volt, investing $20bn in the US.

On Monday, the US scrapped the AI Diffusion Rule, by which former president Joe Biden had blocked exports of powerful AI chips to all but a handful of countries because, US AI tzar David Sacks told the conference, it stopped US technology proliferating around the world and stifled strategic partners such as KSA, when it was supposed to hinder AI development in only a few countries.

The US had decided instead to model AI policy on Silicon Valley’s software ecosystems, where firms became dominant by publishing application programming interfaces (APIs) that others could use to build on their technology.

“They’re able to build these ecosystems without even having any lawyers involved,” said Sacks. “There’s no need for a contract. You just publish an API. In a similar way, the US needs to encourage the world to build on our tech stack.

“President Trump said ‘the US has to win the AI race’. How do we win the AI race? We have to build the biggest partner ecosystem. We need our friends like the Kingdom of Saudi Arabia, and other strategic partners and allies, to build on our tech.

“We want our technology to spread,” he said. “We want people to use it. We want to become the standard.”