Huawei Technologies recently opened a cloud data centre in the Saudi’s capital Riyadh in a bid to grow its online service offerings in the Middle East and North Africa.

The Riyadh-based cloud data center, Huawei’s 30th globally, is set to bolster government services in Saudi Arabia. Furthermore, it will serve as a platform for the development of AI applications and language models in Arabic.

This development provides a significant boost to Saudi Arabia’s Vision 2030 initiative, which was initiated seven years ago. Furthermore, in 2020, Saudi Arabia had unveiled ambitious plans to invest $20 billion in artificial intelligence, as part of its efforts to diversify its economy in alignment with the goals of Vision 2030.

Saudi Arabia is bullish on developing and investing in AI initiatives however lacks hardware infrastructure for which it is majorly dependent on the US. Currently, NVIDIA is the only sole provider of GPUs that can be used to train LLMs. Even China’s Baidu is dependent on NVIDIA for its GPU supply. 

According to a recent Financial Times report, China’s leading internet giants Baidu, ByteDance, Tencent, and Alibaba, have made substantial orders totaling $1 billion for the acquisition of roughly 100,000 A800 processors from a U.S. chip manufacturer, with delivery scheduled for later this year.

However, things are changing as China’s Huawei has cracked the code to manufacture its own GPU which outperforms NVIDIA’s A100. Huawei will not just stop at catering to its domestic players like Baidu and Tencent and the company might set  its sights on the Middle East as well. 

Middle East and China Together can hurt US 

All of this is happening amidst the geopolitical tensions among the three countries. Huawei’s decision to open a cloud data center in Saudi Arabia gives the Chinese tech giant an edge as Saudi Arabia currently is an unexplored market when it comes to generative AI.  

The US is trying its best to suppress the developments happening in both China and the Middle East by not letting its domestic chipmakers sell AI chips and GPUs across the borders. Notably, Huawei was also placed on a trade blacklist in May 2019  over national security concerns. Meanwhile, the US’s chair of the House of Representatives’committee is contemplating restricting all technology exports to Huawei after it recently launched a phone called the Mate 60 Pro which contains a chip which China locally developed.

There is no denying the fact that China is a huge market for NVIDIA and other chip makers as it imports about 53.7% of the world’s supply of chips worth around $240 billion.  In its attempt to race ahead in the LLM race by depriving China of GPUs, the US hurt itself more. 

Notably, the US chipmakers were smart enough and they outwitted the US government and supplied H800 and A800 which were nothing but modified versions of H100 and A100 respectively.  

In May, NVIDIA CEO Jensen Huang warned that China will cultivate its own chip companies in response to tensions with the U.S. and that existing chip players will have to work hard to stay competitive. It appears that his prediction has come true. 

Now that Huawei has GPUs under its arsenal, it has got a solid customer in Saudi Arabia who has got enough capital to avail the services of the Chinese giant. According to a report Saudi Arabia makes $1 billion from oil exports everyday. What else does China need? If it is able to crack the GPU code, it has got a perfect customer in Saudi Arabia who has enough capital in return. 

Earlier this year Saudi Arabia secured no less than 3000 H100 GPUs from NVIDIA. These processors are valued at $40,000 each. A little number-crunching and it becomes apparent that Saudi invested a staggering $120 million to secure this impressive array of GPUs. 

Saudi Arabia is not alone among the Middle East nations who are aiming high in the field of AI. Recently UAE’s TII launched Falcon 180B which is supposedly fueled by money that the country earns from oil exports. 

This definitely suggests that the United States should step up its game and look at the Middle East as a growing market and not as a threat. Otherwise, China might take the lead.