Saudi Arabia wants to use its oil billions to become an AI power player

Saudi Arabia has over the past decade used its massive oil wealth to become an important backer of technology companies. Now at the Future Investment Initiative Institute, the kingdom’s annual “Davos in the Desert” exhibition has become a major hub for AI data centers.

During FII’s opening session, Yasir Al Rumayyan, chairman of Saudi Arabia’s $930 billion sovereign wealth fund, told tech companies to build the massive data centers needed to train and run new AI systems in the kingdom to take advantage of its energy resources, global location and available land. “The reason we are investing in AI is that Saudi Arabia is very well positioned to be a global hub, not just a regional hub,” Rumayyan said.

The kingdom’s pitch on AI was met with a warm welcome by some of the power brokers in Wall Street and Silicon Valley who flew to the summit in the Saudi capital of Riyadh. “The presence of very large pools of capital, energy and the ability to build data centers will be a key point,” said Eric Schmidt, Alphabet’s former chief executive.

Schmidt endorsed the kingdom’s plan, noting that AI training and completion could be run from data centers based there to bypass restrictions on electricity generation and transmission in the United States. “There is every reason to think that Arabia could become one of the big winners here if it deploys its money wisely and quickly,” Schmidt said.

A day later, Rumayyan signed a deal with Google to bring its new AI chips to its data center in the kingdom. Oracle already has a $1.5 billion data center in the country.

The demand for energy to fuel new AI data center projects has led to a flurry of infrastructure investment over the past year. In the United States, Microsoft announced plans in September to bring the stricken Three Mile Island nuclear reactor back online, Amazon unveiled three major nuclear deals earlier this month, while OpenAI’s Sam Altman has reportedly lobbied for data centers so large that they would have the same energy. requires 4 million houses. Meanwhile, Blackstone CEO Stephen Schwarzman warned that the electricity demands to power AI computing could see electricity demand rise by 40% over the next ten years.

Saudi officials claim they can provide power about 12% cheaper than the average 7.8 cents per kilowatt hour paid by data centers in the United States. “You will have the lowest cost energy to build data centers anywhere in the world,” said Amin Nasser, CEO of Aramco, the world’s largest oil producer.

Nasser said the kingdom could provide electricity at 4.8 cents per kilowatt hour from gas, or $6.8 from renewable energy sources. “They should come to Saudi Arabia to make green data centers,” Nasser said.

The kingdom’s on-ground deployment hinges on another ambitious target to build 130 gigawatts of renewable energy by 2030, equivalent to two-thirds of Germany’s total current wind and solar infrastructure. Saudi Arabia had only about 2.5 gigawatts of solar capacity built as of last year, according to BloombergNEF

The kingdom’s AI ambitions could also see it clash with its oil-rich neighbors in the Gulf. Abu Dhabi in particular has its own ambitious AI plans, which are led by its state AI group G42, a new $100 billion AI investment fund, and a handful of smaller AI labs and companies.

However, the two Gulf countries face the same barrier to access to advanced chips from US companies such as Nvidia. The Biden administration has placed export controls on the graphics processing units (GPUS) used to perform the calculations that power AI, fearing they could be resold in China. Microsoft invested $1.5 billion in the G42 in April as part of a deal to end all cooperation with China, while the head of Saudi Arabia’s top research university last week vowed to halt any projects that could offer China any access to US-made chips, according to the FT. .

One major AI project not discussed at the summit was a reported $40 billion investment fund to be led by PIF with venture capital investors Andreessen Horowitz. PIF revealed last year that it had invested in A16Z funds.

Saudi officials have signaled that the era of massive offshore project financing, such as anchoring nearly half of SoftBank’s $100 billion Vision Fund in 2016, may be over for now. Oil prices stalled at $80 a barrel last year, and rising foreign investment has blown a $32 billion hole in the kingdom’s budget and caused spending on mega-projects like the futuristic city of Neom to reported to return.

PIF’s Al Rumayyan also said that international projects such as stakes in foreign investment funds will now make up a smaller part of its overall expenses. This could fall to 18% from the current level of 21%, but a significant drop from its peak of 30% in 2020.

However, around 8,000 people gathered at the annual summit in Riyadh attracted by the billions of dollars the Saudi wealth fund has spent on fund investments, with startups such as electric car maker Lucid and AR company Magic Leap, sporting events such as LIV Golf and Newcastle . United Football Club. “People were coming to us and asking for money,” Rumayyan said on October 29. “We now see a shift from people wanting to take our money to people wanting to co-invest.”

The topic of AI permeated many of the discussions at the summit held at Riyadh’s opulent Ritz-Carlton hotel. A trio of clumsy bots that appeared in past events were pulled in on behalf of AI avatars who occasionally grabbed the mic to fact-check and upstage the bigwigs and powerful agents on stage with regurgitated lines. apparently from a large language pattern. “I think they’ve lost control of the avatar which is kind of troubling,” said CNN’s Anna Stewart while moderating a panel of three billionaires. “No, she’s late to the game. Need people on a panel!”