Challenges undermine Gulf States’ ambitions in AI development: FT
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Despite heavy investment, Gulf nations face workforce, research, and security challenges in AI development, limiting progress toward their tech ambitions.
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US President Donald Trump arrives with Saudi Crown Prince Mohammed bin Salman for the group photo with Gulf Cooperation Council leaders during the GCC Summit in Riyadh, Saudi Arabia, Wednesday, May 14, 2025. (AP)
Energy-rich Gulf monarchies are competing to establish themselves as centers for power-intensive artificial intelligence infrastructure, investing heavily in the technology to drive economic diversification and transform government services, The Financial Times reported on Sunday.
During US President Donald Trump’s recent visit to the region, agreements highlighted Saudi Arabia and the UAE’s push to emerge as AI leaders, with chipmaker Nvidia partnering with Saudi-backed AI group Humain, which aims to launch a $10 billion fund and attract US tech investments.
The Gulf had the capital, energy, and political will to become AI leaders, and all they needed was the technology, which, thanks to Trump, could now become available, Sam Winter-Levy, fellow at Carnegie Endowment for International Peace, told FT.
Experts caution that despite the region's grand AI aspirations, challenges remain, as both countries struggle with a shortage of skilled workers compared to tech hubs like Silicon Valley or Shanghai, while their research output continues to lag behind other nations.
At the same time, American analysts warn about the risks of sensitive US technology being diverted to China.
Gulf lacks local AI giants
While Gulf states intend to provide access to their high-cost infrastructure for neighboring African and Asian nations that may lack the resources to build their facilities, the primary demand is expected to come from American tech firms like OpenAI, which recently revealed plans to scale up its $500 billion Stargate initiative in the UAE.
Despite their grand aspirations, OECD data shows that the Gulf region has yet to produce a dominant homegrown company developing cutting-edge AI models comparable to OpenAI, China's DeepSeek, or France's Mistral, while also facing a shortage of concentrated AI research expertise, FT said.
Research takes the cake in the Gulf
Rather than private sector innovation, government-linked organizations are leading advanced AI research initiatives under royal patronage, with regional projects focusing on developing Arabic large language models as part of their technological push.
Under the leadership of Abu Dhabi crown prince Sheikh Khaled, the Advanced Technology Research Council in Abu Dhabi employs 1,300 researchers who have developed multiple large language models while continuing to work on commercial applications for businesses.
MBZUAI President Eric Xing attributed the UAE's limited research output to its small population of 10 million and developing higher education infrastructure, emphasizing their strategic focus on high-quality research over volume.
While researchers connected to the six-year-old university have contributed publications in fields like protein modeling, the most groundbreaking advancements in this domain continue to originate from Western institutions, including Google's London-based AI division DeepMind.
In their bid to draw in leading AI experts and firms, Gulf nations are offering enticing incentives such as favorable tax policies, extended "golden visa" residency programs, and more flexible regulatory environments.
According to OECD data collected from LinkedIn's professional network, the UAE ranked as the third most popular destination for AI-skilled workers migrating between 2019 and 2024, trailing only other tax-friendly locations, Luxembourg and Cyprus, the Financial Times stated.
Alliance politics affect AI development
To advance its technological ambitions, the Gulf region is actively forming alliances with Western tech leaders, including the UAE's G42 announcing a recent collaboration with French AI firm Mistral to co-develop AI platforms and infrastructure. Additionally, Gulf countries are also maintaining partnerships with US semiconductor company Cerebras to power its supercomputing systems and secured a $1.5 billion minority investment from Microsoft last year.
Dimitris Moulavasilis, CEO of G42's healthcare arm, M42, which implements AI in medical services, explained to FT that Microsoft is supplying technical personnel while emphasizing their ongoing collaboration through multiple joint initiatives.
The technological ambitions of Gulf states cannot be achieved by any single nation alone, requiring instead strategic alliances with compatible partners to succeed, according to Karim Sabbagh, managing director of satellite mapping company Space42, which primarily serves UAE government clients.
US concerned about the Gulf turning to China
Sheikh Tahnoon bin Zayed al-Nahyan, who serves as both G42 chairman and the UAE's national security advisor, has actively worked to strengthen ties with the United States while making clear commitments that in the global AI competition, the Emirates has aligned itself with Washington rather than Beijing.
Space42, a subsidiary of G42, along with Saudi Arabia's Humain, have publicly stated their commitment to avoid using Chinese-developed AI models for training their artificial intelligence systems.
Despite these promises, concerns persist within the US security community about whether the Gulf nations, in their rush to emerge as AI competitors, will maintain their commitments.
Analysts warn that Gulf nations' competitive drive in AI development could lead to compromising security standards, with Jimmy Goodrich, RAND Corporation's senior technology adviser, expressing specific concerns that these countries might resort to utilizing a Chinese workforce or firms as shortcuts in their technological advancement, thereby creating potential vulnerabilities.
Experts caution that Chinese firms might exploit Gulf-based operations as a workaround to bypass US export controls on sensitive technologies needed for AI development.
While the Gulf region has faced challenges due to US semiconductor export controls designed to prevent technology transfers to China, the Trump administration has sought to ease these restrictions to maintain American technological leadership. Democratic critics have raised concerns about the lack of clear safeguards in the recent AI agreements with the UAE and Saudi Arabia to prevent Chinese access to these advanced chips.
Even with potential increases in chip imports to the Gulf, experts expect tight restrictions will remain, Haykel Hajjaji, a Covington lawyer serving on the US-UAE Business Council's AI Task Force, told FT. Hajjaji noted that such deals would likely include strict compliance requirements and enhanced safeguards against technology diversion to prohibited entities or locations.
While developing AI infrastructure for major US tech firms remains a priority, the Gulf region also requires stronger domestic innovation, as demonstrated by entrepreneurs like Baghdad Gherras, who recently left his position at a family office to establish UAE-based startup SemanticPay, focused on creating payment infrastructure for AI-powered transactions.
“I’m not the only one,” Gherras told the Financial Times, emphasizing that “We need to start building AI applications because that’s the only viable use of compute for these data centres.”
