AI Hegemony Battle Turns into a 'War of Money'... Saudi Arabia Also Announces "54 Trillion Won Investment" (Comprehensive)

‘Oil-rich’ Saudi Arabia is set to establish a fund worth approximately $40 billion (about 53.58 trillion KRW) to invest in artificial intelligence (AI). The plan includes not only investing in existing AI technology startups but also considering the establishment of its own companies. This marks the entry of Middle Eastern heavyweights such as the United Arab Emirates (UAE) and Saudi Arabia into the AI supremacy competition, which has become a ‘money war’ among nations.

[Image source=Reuters Yonhap News]

Saudi Arabia Partners with US VC for AI Investment

According to the New York Times (NYT) on the 19th (local time), a delegation from Saudi Arabia’s Public Investment Fund (PIF), led by Crown Prince and Prime Minister Mohammed bin Salman, recently met with US IT venture investment firm Andreessen Horowitz and discussed potential partnerships based on these plans.

At the meeting, the Saudi side expressed its intention to support AI-related technology startups, including chip manufacturers and vast data centers necessary to support next-generation computing. The possibility of establishing its own AI startups was also mentioned. Multiple sources confirmed that these investments could be fully underway in the second half of 2024. There is also a possibility that other venture capital firms besides Andreessen Horowitz will join.

The NYT reported, "Saudi Arabia is raising massive funds for AI investment" and "could become the world’s largest investor in the AI sector." This is seen as reflecting Saudi Arabia’s ambition to diversify its economy beyond being an oil-rich country and to establish itself as a more influential nation. The media added that Saudi Arabia has already demonstrated such moves through its sovereign wealth fund managing assets worth about $900 billion.

The Era of AI Nationalism... Oil Money Joins the Battle

Since the ChatGPT craze, the AI war has already expanded into a ‘money war’ among nations. Recently, to secure AI semiconductors, which are at the core of AI competition, not only companies but also governments worldwide have been actively investing large sums of money. The Economist has even defined this competition among countries for AI industry dominance as ‘the era of AI nationalism.’

Among these, the Middle Eastern heavyweights with vast oil money have recently attracted attention. Sam Altman, CEO of OpenAI and known as the ‘father of ChatGPT,’ recently approached UAE’s state-owned investment firm MGX to develop its own semiconductor chips. Masayoshi Son, chairman of Japan’s SoftBank Group, also agreed to receive a significant portion of investment from Middle Eastern oil money while promoting the $100 billion Izanagi Project.

This is based on the judgment by various countries that AI has become a game-changer that will revolutionize national economies. Middle Eastern countries, which have secured massive oil wealth, are also strategizing to find the next-generation growth engine in AI. In addition to abundant financial resources, Middle Eastern countries including Saudi Arabia have the advantage of relatively easier state-led momentum compared to Western countries, especially regarding concerns about AI’s impact on privacy and employment. The UAE, for example, established AI company AI71 last year and is pursuing commercialization of its own large language model (LLM). Moreover, it plans to independently develop AI semiconductors in the future.

The US and China, leading the AI supremacy competition, are not easing their efforts. The US Biden administration’s budget proposal for fiscal year 2025 (October 2024 to September 2025) includes about $20 billion (approximately 26 trillion KRW) for AI. China also allocated 370.8 billion yuan (about 67.5 trillion KRW) for central government science and technology budgets, including AI, which is a 10% increase from the previous year.

In Europe, which is considered to be lagging behind the US in AI competition, moves such as establishing investment funds have been confirmed. Italian Prime Minister Giorgia Meloni recently announced that the national investment bank CDP will invest 1 billion euros (about 1.4 trillion KRW) and attract additional private investments to promote AI investment.

This content was produced with the assistance of AI translation services.