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US closer to green lighting Nvidia chips for Saudi Arabia

Updated Sep 11, 2024, 1:32pm EDT
gulftech
Reed Albergotti/Semafor
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The Scoop

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RIYADH — The US government is considering allowing Nvidia to export advanced chips to Saudi Arabia, people familiar with the matter said, which would help the country train and run the most powerful AI models.

The fate of those sales was a major, unofficial topic at Saudi Arabia’s global AI summit, known as GAIN, on Thursday. Representatives from AI hardware firm Groq, Google, and Qualcomm, along with Saudi government officials, mingled and spoke at the event.

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Earlier this year, the US curtailed shipments of Nvidia’s advanced graphics cards out of concern that Saudi Arabia’s close ties with China could allow valuable AI secrets to flow there or possibly open the door to the mainland gaining access to those chips. The Biden administration has forbidden companies from selling the cutting edge equipment to China because of national security worries.

Conference attendees, including some who work for the Saudi Data and AI Authority, said the country is working to satisfy US security demands in an effort to get the chips as soon as possible.

The gathering in Riyadh also marked the Gulf power’s decisive shift toward the US camp in the bipolar global AI tug of war. One participant who has been to the event before said this year’s gathering had a noticeably smaller Chinese presence. On the convention center floor, there were only a handful of Chinese attendees. Exhibitors included Huawei and Alibaba, both Chinese firms, but few others.

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According to people with knowledge of Saudi policies, the government has taken steps to limit its involvement with Chinese firms, while keeping the door open to China should the United States cut the kingdom off from the most advanced US chips.

One of the people said the Saudi government is expecting shipments of Nvidia H200s, the company’s most advanced chips currently available. A Nvidia spokesman declined to comment.

A Commerce Department spokesperson told Semafor that the agency “cannot speak to specific licenses or transactions” but stressed that policy actions “are the subject of a rigorous interagency process including the Departments of Commerce, State, Defense, and Energy.”

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Saudi Arabia is in a race to develop large scale AI models, both against the fast pace of the industry and its regional rival, the United Arab Emirates, which beat Saudi Arabia to the punch.

But the lack of chips means technology companies in Saudi Arabia are being held back.

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Reed’s view

I spent Tuesday getting a glimpse into the rapid pace of change in Saudi Arabia. The AI conference, which was held “under the patronage” of Saudi Crown Prince Mohammed bin Salman, began with a laser light show and male and female dancers in tight clothes and a rendition of John Lennon’s Imagine sung by a young boy.

Part of that change is that Saudi Arabia, like much of the world these days, is tech crazed. There were three tech conferences in Riyadh yesterday. Later that night, I attended a startup demo day put on by accelerator Flat6Labs.

The big question, though, is how it will deal with the US exerting its soft power on chips. Saudi Arabia is essentially being asked to cut tech ties with China, a long time ally, in exchange for the ability to buy the world’s most advanced AI chips.

The country doesn’t have all the know-how it needs to run them and relies, to some extent, on bringing expertise in. But it, more than most countries in the world, can accomplish one of the most difficult parts of AI development: providing lots of cheap energy.

But even if the US gets what it wants in terms of the restrictions, it still needs to get comfortable allowing IP to seep into Saudi Arabia, a country that wants to ultimately be less dependent on outside countries for its technological efforts.

It did that with China, only to have it come back to haunt them.

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Room for Disagreement

A New York Times article on the kingdom’s AI ambitions revealed some skepticism about its chances for success: Some question whether Saudi Arabia can become a global tech hub. The kingdom has faced scrutiny for its human rights record, intolerance to homosexuality and brutal heat. But for those in the tech world who descended on Riyadh last month, the concerns seemed secondary to the dizzying amount of deal-making underway.

“They are just pouring money into AI,” said Peter Lillian, an engineer at Groq, a US maker of semiconductors that power AI systems. Groq is working with Neom, a futuristic city that Saudi Arabia is building in the desert, and Aramco, the state oil giant. “We’re doing so many deals,” he said.

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Notable

  • A Forbes article earlier this year found that some startups that were promised funding as part of Saudi Arabia’s AI ambitions have not been paid, raising questions about the state-sponsored effort to build the country’s tech ecosystem.
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