Countering the Digital Silk Road: Saudi Arabia

Executive Summary

The Kingdom of Saudi Arabia is the heavyweight of the Arab world and a rising global power. The kingdom boasts the world’s second-largest proven oil reserves and fourth-largest sovereign wealth fund. Besides Türkiye, it is the only trillion-dollar economy in the Middle East.¹

Under Crown Prince Mohammed bin Salman (MBS), Saudi Arabia has gone all in on Vision 2030, an audacious initiative to diversify the petro-economy, modernize society, and expand the kingdom’s global influence. Technology is central to Vision 2030, and up to 70 percent of its goals involve data and artificial intelligence (AI).² The kingdom views emerging technologies as essential to creating good jobs, indigenizing critical industries and supply chains, and realizing Neom, the crown prince’s trillion-dollar techno-region in the country’s northwest. For all of Riyadh’s ambition, its leaders recognize that they cannot achieve Vision 2030 without foreign technology partnerships.

The United States and China are now engaged in a fierce competition to become Saudi Arabia’s preferred partner as it undertakes this historic, technology-driven transformation. Both countries seek to draw this strategic, fast-growing, and ambitious rising power closer to their respective orbits. The United States has formidable advantages: American companies enjoy a long history in the country, helping to underwrite the Saudi energy sector and introduce the first radios, televisions, and computers to the kingdom. U.S. and European countries also led the Saudi tech landscape for decades, supplying its earliest telecommunications, computers, and software.³ The United States remains the kingdom’s primary security partner.

As the kingdom’s economy and ambitions grew, it embraced telecommunications as foundational to growth and modernization. To expand connectivity, Riyadh opened the door to Chinese firms, which rushed in and secured key partnerships with government agencies and domestic champions. In doing so, Chinese companies established a beachhead during the kingdom’s transition to 4G and 5G networks, eroding a longtime Western advantage as the preferred technology providers.

Through it all, China also benefited from growing tensions in U.S.-Saudi relations over policies concerning the Arab Spring, the Iran nuclear deal, civil wars in Syria and Yemen, and the assassination of Washington Post journalist Jamal Khashoggi. Over this period, Beijing matured from merely a large-scale energy importer and provider of cheap information and communications technology (ICT) into a genuine strategic partner. Although growing energy imports have made China the kingdom’s largest trading partner, energy is just one facet of the bilateral relationship: Companies like Huawei and Alibaba have also expanded their offerings from telecommunications to smart cities, cloud infrastructure, and AI.⁴ Two-way investment in each country’s tech sector has also grown, although it pales in comparison to capital flows between Saudi Arabia and the United States.⁵ The kingdom is now a pillar of China’s Digital Silk Road (DSR), punctuating a remarkable turnaround given that the countries only normalized relations in 1990.

The kingdom’s proactive embrace of digital infrastructure has paid dividends. The country has connected 99 percent of its population, with median mobile speeds that are roughly double the global average.⁶ In 2024, the Saudi government touted its emergence as the largest and fastest-growing digital economy in the Middle East.⁷ Riyadh now sees technology—and especially AI—as the engine of further progress, and it seeks to dramatically expand its domestic data center capacity, semiconductor design and fabrication ecosystem, and AI adoption. It now seeks foreign partners to realize these ambitions.

The United States has a strong hand to play. Washington’s challenge is meeting Saudi demand without compromising sensitive U.S. technologies, offshoring leadership at the AI frontier, or enabling greater digital authoritarianism. At the same time, Riyadh will likely resist Washington’s efforts to force outright alignment with the U.S. technology ecosystem, given its fast-maturing relationship with Beijing. Still, there is considerable opportunity for U.S. officials and industry to draw on their technological, political, and reputational advantages to outcompete China’s DSR in the heart of Arabia. To that end, this report offers the following recommendations for U.S. officials:

• Conclude a secure, phased, and verifiable deal with Saudi Arabia for advanced AI chips. As of September 2025, the Trump administration’s agreement with Saudi Arabia to expand access to advanced AI chips remains under negotiation. Under its initial terms, the Saudi AI champion Humain could purchase hundreds of thousands of advanced NVIDIA and AMD chips to build a 1 gigawatt (GW) data center.
  
  The administration has considerable leverage: Huawei’s Ascend chips are less performant and less available for foreign deployment, given compute shortages within China. Unlike many emerging markets, leaders in Riyadh strongly prefer best-in-class offerings, and U.S. companies dominate the AI stack. Put simply, Saudi Arabia needs American AI more than America needs Saudi capital. This presents a strategic but potentially fleeting opportunity for the United States to secure its place as the kingdom’s preferred AI partner.
  
  At the same time, the administration should proceed only if all Saudi recipients of AI chips, like Humain, meet the following conditions.
  • Highest standards of physical and cybersecurity
  • Rigorous background checks and insider threat training for employees
  • Know-your-customer verification
  • Guarantees for U.S. companies to deploy, maintain, and oversee the majority of AI chips in Saudi data centers
  • Assurance and verification that U.S.-designed AI chips do not power applications that facilitate human rights abuses and repression
  • Cessation of partnerships and other support for Chinese firms related to strategic technologies like AI
  • Regular audits accounting for AI chip locations and uses
  • Divestment of Chinese technology and telecommunications vendors from core digital infrastructure and services related to U.S. security and intelligence cooperation

• Support the expansion of Saudi fabrication capacity for legacy chips while limiting support for leading-edge semiconductor design tools and research. The United States should welcome increased Saudi capacity to fabricate legacy chips to diversify its supply chains from China, and it should encourage industry and research partnerships to that end. At the same time, Washington should not undermine its leverage by enabling advanced chip design and fabrication in Saudi Arabia and other nations that lack treaty-level alignment with the United States. For now, the kingdom does not seek capabilities in leading-edge chip fabrication and has focused more on legacy node chip fabrication and fostering a fabless design ecosystem.
• Establish a process to fast-track inbound investments from allied and partner sources for U.S. strategic technologies. This could align with the Trump administration’s February 2025 America First Investment Policy.⁹ Reforms should streamline application criteria, shorten review times, expand dedicated personnel and resources, and include rigorous standards for intellectual property (IP) protection, cybersecurity, personnel background checks, and divestment from Chinese firms in strategic technology sectors or with links to the military or security services. The administration could also consider a “clean capital” designation for firms that disclose and divest links to adversary-linked firms, expediting approvals.
• Leverage people-to-people ties to support Riyadh’s Saudization policies. Saudis are more likely to study at U.S. universities, know Western business practices, and speak English instead of Mandarin. This helps U.S. firms align with Riyadh’s efforts to boost Saudi hiring and upskill local talent. But this advantage will fade with time. The Chinese government has waived visas for Saudi citizens and expanded Mandarin offerings in the kingdom. Chinese companies are also increasing local hiring and upskilling.
  
  To expand America’s people-to-people edge, higher education institutions with active partnerships in Saudi Arabia should expand curricula related to AI and emerging technologies. The Trump administration could prioritize Saudi talent in a new Young Technology Leaders Initiative—modeled on the successful Young African Leaders Initiative—to identify the next generation of promising global talent and strengthen ties with the U.S. ecosystem.¹⁰
• Engage the Saudi Communications, Space, and Technology Commission about the draft Global AI Hub Law. Engagement should prioritize designating American-operated data centers in Saudi Arabia as “data embassies” that allow for limited U.S. administrative jurisdiction. This would facilitate compliance with U.S. export controls, spot inspections to curb diversion and unauthorized access, workload attestations, and other oversight mechanisms.
• Pilot a joint effort by the U.S. Department of Homeland Security (DHS), the Department of State, and the Department of Energy (DOE) to bolster AI data center security in strategic overseas markets. The Trump administration’s July 2025 AI Action Plan called for the DHS to create guidance for the private sector to remediate and respond to “AI-specific vulnerabilities and threats.”¹¹ Once this process concludes, the DHS should work with the State Department and the DOE to share best practices with Saudi Arabia and other strategic partners with ambitions for large-scale AI and related energy infrastructure.
• Support eventual Saudi transition to 6G through research partnerships. 6G is expected to be the first AI-native telecommunications architecture, with built-in support for intelligent routing and edge-based inference—areas where the United States and its allies remain competitive. If the United States concludes agreements for full-stack AI exports and broader strategic partnerships with the kingdom, it will be better positioned to displace Huawei’s ubiquitous presence in existing Saudi telecommunications networks down the line. In July 2024, Ericsson extended a research and development partnership with the King Abdullah University of Science and Technology through 2026 to advanced 5G and 6G. Other U.S. and allied companies should pursue similar partnerships with Neom, the Ministry of Communications and Information Technology, the Saudi Telecom Company, and other key players ahead of the 6G transition.¹²