Riyadh’s AI Tug-of-War

An AI race with global stakes is unfolding in the Middle East. The United States, still home to the world’s most advanced microchip design and manufacturing capabilities, risks losing its lead in one of the most strategic regions on the planet if it fails to finalise next-generation semiconductor agreements with Saudi Arabia and the United Arab Emirates. Experts warn that Washington’s window of opportunity is rapidly narrowing and that China is poised to fill any vacuum left behind.

A Fragile Lead in a Fast-Moving Race

For now, the US remains ahead of its rivals in producing the cutting-edge chips that power artificial intelligence, high-performance computing and advanced robotics. However, that edge is not guaranteed. Beijing has already caught up in several fields once thought out of reach including 5G networks, biotechnology and older-generation semiconductors and could do the same for the most advanced chips within a few years.

This looming competition has raised the stakes for Washington’s negotiations with Riyadh and Abu Dhabi. Multi-billion-dollar semiconductor deals announced during a presidential visit to the Gulf remain in limbo, with crucial regulatory frameworks still unresolved. Analysts argue that if Washington does not move quickly to complete these agreements, Chinese technology companies could step in to supply the region’s demand,  reshaping the balance of power in one of the world’s fastest-growing technology markets.

High-Profile Deals, Unfinished Business

At the heart of this debate are tentative agreements that would deliver some of America’s most sophisticated hardware to Gulf partners. Chipmaker Nvidia has committed to supplying 18,000 of its most advanced AI chips to Saudi developer Humain, along with hundreds of thousands more to the UAE. These deals are designed to anchor US-Gulf technology cooperation and cement Washington’s position as the region’s preferred AI partner.

Yet progress has been slow. Concerns within Washington’s national security community about potential technology leakage — whether intentional or accidental — to China or other adversaries have created hesitation. If Saudi or Emirati entities were to provide indirect access to US-origin technology, it could erode America’s strategic advantage.

The delays are already raising doubts about whether the agreements can be concluded soon. Analysts believe a breakthrough is possible ahead of a planned visit by Crown Prince Mohammed bin Salman to Washington later this year — but warn that the window is closing fast.

How China Is Closing the Gap

China’s growing role in the Gulf technology landscape adds urgency to the situation. Over the past two decades, Chinese companies have entrenched themselves in sectors ranging from telecommunications and smart cities to electric vehicles. Now they are turning their attention to artificial intelligence and advanced semiconductors — and are rapidly improving their capabilities.

Industry observers say Chinese firms may be only one to two years away from matching American performance in some AI applications. Crucially, China’s willingness to transfer technology and localise production has made it an attractive partner for states like Saudi Arabia that are seeking to build their own tech ecosystems.

This approach stands in contrast to Washington’s more restrictive posture. In areas like drone technology, for example, US reluctance to export advanced systems enabled China to dominate Middle Eastern markets — a cautionary tale that policymakers are eager not to repeat.

Beyond Chips: A Strategic Partnership at Stake

The semiconductor race is about more than hardware. For Saudi Arabia, technology is a cornerstone of Vision 2030, an ambitious plan to diversify its economy and become a global hub for innovation. Securing access to the latest chips and AI capabilities is central to those goals, and Riyadh is prepared to partner with whoever can deliver.

That creates a strategic opportunity for Washington — if it acts decisively. Analysts recommend that the US not only formalise the Nvidia-Humain agreement but also deepen its engagement on several fronts:

Support for domestic chip fabrication: Helping Saudi Arabia build capacity for manufacturing legacy semiconductors would strengthen local industry while securing supply chains.

Investment facilitation: Encouraging US companies to channel capital into Saudi technology projects could expand bilateral cooperation beyond single deals.

Workforce development: Joint training initiatives would cultivate the human capital needed to sustain a high-tech economy.

6G leadership: Partnering with Riyadh on the next generation of wireless connectivity — expected to underpin robotics, autonomous transport and remote medical services — would anchor US influence well into the 2030s.

A Warning Against Complacency

Despite its current lead, Washington risks underestimating China’s progress. Experts caution that every layer of the AI technology stack now has a viable Chinese alternative — one that, while not always superior, is often “good enough” to meet the needs of emerging markets. If the US offers only limited access or slow delivery, Gulf states with ample capital will look elsewhere.

Geopolitics further complicate the equation. Rising tensions in the Gulf and recent conflicts, including Israel’s strike on Hamas targets in Doha, are deepening mistrust between Washington and Riyadh. Against this backdrop, technology cooperation is not just a commercial issue but a test of the broader US-Saudi partnership.

The Clock Is Ticking

The message from analysts is clear: America’s advantage in advanced semiconductors remains real but fleeting. Securing its position as Saudi Arabia’s primary AI partner will require speed, flexibility and a willingness to share more than “crumbs.”

If Washington delays, Beijing’s growing capabilities — combined with its readiness to localise technology and align with local priorities — could allow it to capture a decisive share of the Gulf’s emerging AI landscape. And once that shift occurs, reclaiming lost ground will be far more difficult.

The race for Riyadh is about far more than microchips. It is a contest over who will shape the next phase of the global digital economy — and whether the United States can turn its technological prowess into enduring strategic influence in one of the most pivotal regions of the 21st century.

Written By: 

*Chloe Maluleke

Associate at BRICS+ Consulting Group 

Russian & Middle Eastern Specialist

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