Alat fund of Saudi Arabia poised to cut China ties for US chips and AI

Mavis Tsai, Taipei; Jerry Chen, DIGITIMES Asia 0

Credit: Bloomberg

Saudi Arabia's Alat Fund is prepared to sever ties with China if requested by the United States, following a similar move by UAE's G42.

Speaking to Bloomberg, Alat CEO Amit Midha affirmed that requests received so far center on maintaining a complete separation of manufacturing and supply chains from China. If collaboration with China raises concerns in the US, Alat will terminate those relations.

Taking a side

The fund, backed by Saudi Arabia's Public Investment Fund (PIF), specializes in semiconductor and AI investments. Midha emphasized the US as the preferred partner and market for Alat in these industries.

Anticipating an announcement of partnerships with two US tech firms by the end of June, Midha remained tight-lipped on specifics, including whether these ventures will focus on AI or semiconductors.

Saudi Arabia aims to build its semiconductor manufacturing industry and develop successful AI enterprises, but US concerns persist over Middle Eastern ties to China potentially enabling technology access that bypasses US sanctions.

The price of chips and AI

Besides Saudi Arabia, the UAE's G42 has reportedly scaled back its Chinese operations to comply with US agreements, facing possible sanctions otherwise. G42's concessions include removing certain Chinese technologies from its systems in exchange for maintaining access to US technology such as the Nvidia chips.

Geopolitical factors drove G42's decision to reduce Chinese ties, aiming to collaborate with leading US and European AI tech firms instead.

Microsoft previously announced a US$1.5 billion investment in G42, with the latter planning to utilize Microsoft's Azure cloud computing platform as the backbone for its AI product development and deployment. Additionally, G42 has close partnerships with US companies such as OpenAI and AI processor design firm Cerebras Systems.

Saudi Arabia and the UAE are both vying for dominance in the AI sector in the Middle East. A report by PwC cited by the National suggests substantial economic benefits for GCC countries, with expected annual gains reaching US$23.5 billion collectively by 2030, largely driven by investments in GenAI technology.