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The Middle East's Rise as a Tech Superpower: A New Era of "Tariffs for Tech"


The Middle East's Rise as a Tech Superpower: A New Era of "Tariffs for Tech"
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The Middle East's Rise as a Tech Superpower: A New Era of "Tariffs for Tech"


The Middle East's Rise as a Tech Superpower: A New Era of "Tariffs for Tech"

Donald Trump's recent visit to the Middle East, including stops in Saudi Arabia, Qatar, and the United Arab Emirates, has signalled a major shift in global trade dynamics. The trip, which took place between 13 and 16 May, aimed to position the US as the preferred partner for large-scale investments in technology, data centres, energy, and infrastructure. This approach leverages a "tariffs for deals" policy, suggesting that countries willing to strike significant commercial agreements with the US will be rewarded with lower tariffs. This strategy is actively reshaping the geopolitical landscape, as evidenced by the substantial commitments made by the Gulf nations.

Unprecedented Pledges and Strategic Partnerships

The visit resulted in unprecedented economic pledges, far exceeding those of previous engagements. Saudi Arabia committed to a staggering $600 billion in investment to the US, a figure that far surpasses the $350 billion defence pledge from a 2017 visit. Qatar followed with an even larger $1.2 trillion economic commitment to the US, and the UAE accelerated its previous $1.4 trillion commitment with a pledge of $200 billion in new commercial deals. These pledges are more than just promises; they are the foundation for a new era of business, with specific, actionable projects already underway.

Key Confirmed Projects

The immediate impact of these agreements is already being felt across the technology sector.

  • NVIDIA and AMD have signed agreements with Humane to supply hundreds of thousands of chips for the construction of a one-gigawatt AI data centre.
  • Humane has also partnered with Amazon Web Services (AWS) to create an AI zone, a project with an expected investment exceeding $5 billion.
  • Oracle is joining the fray by opening a new cloud region in Riyadh as part of a $14 billion investment in Saudi Arabia's digital infrastructure.
  • Microsoft has partnered with the UAE-based G42 to build a large-scale AI supercomputer.
  • Quantinuum, a US company, and Qatar's Al Rabban Capital have entered a joint venture, investing $1 billion in quantum technologies.

These confirmed projects illustrate the tangible outcomes of the diplomatic visit and the vast capital flows now being directed towards the US from the Middle East.

A New Centre for AI Adoption and Strategic Geopolitical Implications

The market data confirms the Middle East is rapidly becoming a global tech powerhouse. While Saudi Arabia faced a few tough months earlier in the year, it saw a remarkable 67% growth in August, with growth reaching as high as 321% in other months. More significantly, the share of AI-capable servers in Saudi Arabia, Qatar, and the UAE was around 13% in August, at times peaking at 18%. This is notably higher than in Europe, where the share is only around 10%, suggesting that the Middle East is outpacing traditional markets in AI adoption. This is being driven by an abundance of government-backed investment and ambitious national strategies, such as Saudi Arabia's Vision 2030, which aims to transform the country into a non-oil-dependent economy.

The geopolitical implications of these deals are equally profound. The visit and subsequent agreements are seen as a significant blow to China's Digital Silk Road initiative, as the US is leveraging technology partnerships to regain influence. Despite the UAE's membership in BRICS, these deals demonstrate that the Gulf nations are open to working with both Eastern and Western companies. This "East Meets West" approach positions the region as a unique, neutral ground for technology adoption and development, offering vendors an opportunity to navigate a multipolar world.

The Path Forward

The economic outlook for the region is exceptionally positive. The World Bank projects a 3.2% growth in 2025 and 4.5% in 2026, driven by non-oil sectors. This economic health, combined with forward-thinking government strategies, is expected to propel these countries up the global AI index. Looking ahead, the close working relationship between the US and the Middle East is likely to continue until at least 2029, when a new US presidential administration could introduce different policies. Over this period, it is predicted that Middle Eastern companies will gain a larger presence and ownership of US assets, and the region will play a more pivotal role in global AI development. The combination of large-scale investment, strategic geopolitical positioning, and government-driven initiatives solidifies the Middle East's emergence as a critical hub for technology and AI development on the world stage.

For more trends in the IT META channel, tune into CONTEXT’s monthly META webinar. You'll find these and more channel trends, specifically for the Middle East, Türkiye, and Africa, to help you navigate this dynamic market.

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