n February 2024, Saudi Arabia established Alat, an advanced technology firm owned by the Public Investment Fund (PIF). Saudi policymakers intend to invest approximately $100 billion by 2030 in it, focusing on advanced technologies such as artificial intelligence (AI), semiconductors, emissions reduction, robotics, and smart cities.
Alat and, more broadly, the Kingdom's transition away from being solely an oil–based economy, will significantly impact Saudi Arabia's foreign and domestic politics. It will intensify competition in the Gulf region to attract investments from China, the U.S., and other technological superpowers. Additionally, it will enhance the country's technological capabilities, despite doubts about the long–term growth due to the continued significant prominence of the Saudi government in this sector.
Alat and Saudi Arabia's innovation efforts
When Saudi Crown Prince Mohammed bin Salman announced the creation of Alat in February 2024, he stressed the vital role this organization will play in Saudi Arabia's economic development. Saudi estimates predict this company will create 39,000 direct jobs and reach $9.3 billion in non–oil GDP contribution by 2030. Alat's AI infrastructure unit will combine artificial intelligence with other Industry 4.0 technologies, including robotics, big data, and automation.
Despite being a new player, Alat has already signed agreements with industry giants like Softbank and Dahua Technology. Alat and SoftBank plan to build a "lighthouse factory," i.e., a new Industry 4.0–based facility to improve production efficiency, agility, and scalability. IN partnership with Dahua Technology, Alat pledged a $200 million investment to produce an AI–based surveillance system.
Alat is a crucial component of the Saudi 2030 Vision, a government–backed initiative transforming the country from a rentier state to an innovation hub in future technologies. Alat is moving on the same path as the 2022–announced project called NEOM, a special economic zone worth about $500 billion containing the futuristic vertical city called "The Line"—a project that has been recently scaled back due to financial concerns.
Alat's policy implications, both at home and abroad
In the Middle East, and particularly the Gulf, Saudi Arabia is competing to attract as much foreign direct investments (FDI) as possible. The main regional rivals are the United Arab Emirates (UAE) and Qatar. In this regard, Saudi Arabia has improved its performance—it ranked third in the 2024 FDI confidence index for emerging economies, which predicts what markets are likely to attract more investment.
Alat's establishment will also impact the Kingdom's foreign policy. Alat's CEO, Amit Midha, recently told Bloomberg that the company would divest from China if the U.S. asked. The U.S. is increasingly scrutinizing China's ties to the Middle East over concerns that countries like Saudi Arabia could provide channels for Beijing to access technology it is blocked from purchasing. Last year, the U.S. made a similar request to G42, an Abu Dhabi–based AI company, and then facilitated an investment of about $1.5 billion from Microsoft.
Amit Midha's statement is even more significant at a time when Beijing's footprint in the region is believed to be growing. Last year, China brokered a historic deal between Saudi Arabia and Iran, two hostile countries. Most international observers welcomed that agreement as a success. However, the security and economic cooperation between the United States and the Gulf countries remains predominant. The Gulf interest in investing in the Chinese market has decreased as China's economy has slowed and the Chinese Communist Party's control over the domestic economy has increased.
Money, energy, and government–led initiatives
As yet another step toward Saudi's economic diversification, technological advancement brings light and shadow. On one hand, the Kingdom is rich in two resources—energy and money—that are critical for these purposes. The New York Times reported that with the establishment of Alat, Saudi Arabia has become the largest investor worldwide in the AI sector. Meanwhile, oil prices are climbing to more than $90 per barrel.
On the other hand, the resources invested in Alat and similar firms come from Saudi government oil and gas revenues. Despite Vision 2030's efforts, Saudi Arabia's private sector's share of GDP was 41% in 2022—it has increased in recent years, but it is still lower than that of other competitors. This element could undermine the long–term development of these new technologies since the private sector is more effective in allocating resources and making market–based economic decisions.
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Saudi Arabia's expanding role in advanced technologies
Riyadh, Saudi Arabia. Photo by سيف الظاهر on Unsplash.
June 4, 2024
Saudi Arabia's transition away from being solely an oil–based economy will significantly impact its foreign and domestic politics. Some of its latest investment moves tell the tale, writes Elia Preto Martini.
I
n February 2024, Saudi Arabia established Alat, an advanced technology firm owned by the Public Investment Fund (PIF). Saudi policymakers intend to invest approximately $100 billion by 2030 in it, focusing on advanced technologies such as artificial intelligence (AI), semiconductors, emissions reduction, robotics, and smart cities.
Alat and, more broadly, the Kingdom's transition away from being solely an oil–based economy, will significantly impact Saudi Arabia's foreign and domestic politics. It will intensify competition in the Gulf region to attract investments from China, the U.S., and other technological superpowers. Additionally, it will enhance the country's technological capabilities, despite doubts about the long–term growth due to the continued significant prominence of the Saudi government in this sector.
Alat and Saudi Arabia's innovation efforts
When Saudi Crown Prince Mohammed bin Salman announced the creation of Alat in February 2024, he stressed the vital role this organization will play in Saudi Arabia's economic development. Saudi estimates predict this company will create 39,000 direct jobs and reach $9.3 billion in non–oil GDP contribution by 2030. Alat's AI infrastructure unit will combine artificial intelligence with other Industry 4.0 technologies, including robotics, big data, and automation.
Despite being a new player, Alat has already signed agreements with industry giants like Softbank and Dahua Technology. Alat and SoftBank plan to build a "lighthouse factory," i.e., a new Industry 4.0–based facility to improve production efficiency, agility, and scalability. IN partnership with Dahua Technology, Alat pledged a $200 million investment to produce an AI–based surveillance system.
Alat is a crucial component of the Saudi 2030 Vision, a government–backed initiative transforming the country from a rentier state to an innovation hub in future technologies. Alat is moving on the same path as the 2022–announced project called NEOM, a special economic zone worth about $500 billion containing the futuristic vertical city called "The Line"—a project that has been recently scaled back due to financial concerns.
Alat's policy implications, both at home and abroad
In the Middle East, and particularly the Gulf, Saudi Arabia is competing to attract as much foreign direct investments (FDI) as possible. The main regional rivals are the United Arab Emirates (UAE) and Qatar. In this regard, Saudi Arabia has improved its performance—it ranked third in the 2024 FDI confidence index for emerging economies, which predicts what markets are likely to attract more investment.
Alat's establishment will also impact the Kingdom's foreign policy. Alat's CEO, Amit Midha, recently told Bloomberg that the company would divest from China if the U.S. asked. The U.S. is increasingly scrutinizing China's ties to the Middle East over concerns that countries like Saudi Arabia could provide channels for Beijing to access technology it is blocked from purchasing. Last year, the U.S. made a similar request to G42, an Abu Dhabi–based AI company, and then facilitated an investment of about $1.5 billion from Microsoft.
Amit Midha's statement is even more significant at a time when Beijing's footprint in the region is believed to be growing. Last year, China brokered a historic deal between Saudi Arabia and Iran, two hostile countries. Most international observers welcomed that agreement as a success. However, the security and economic cooperation between the United States and the Gulf countries remains predominant. The Gulf interest in investing in the Chinese market has decreased as China's economy has slowed and the Chinese Communist Party's control over the domestic economy has increased.
Money, energy, and government–led initiatives
As yet another step toward Saudi's economic diversification, technological advancement brings light and shadow. On one hand, the Kingdom is rich in two resources—energy and money—that are critical for these purposes. The New York Times reported that with the establishment of Alat, Saudi Arabia has become the largest investor worldwide in the AI sector. Meanwhile, oil prices are climbing to more than $90 per barrel.
On the other hand, the resources invested in Alat and similar firms come from Saudi government oil and gas revenues. Despite Vision 2030's efforts, Saudi Arabia's private sector's share of GDP was 41% in 2022—it has increased in recent years, but it is still lower than that of other competitors. This element could undermine the long–term development of these new technologies since the private sector is more effective in allocating resources and making market–based economic decisions.
