Middle East AI chip demand to grow 150% by 2035
A market report forecasts that semiconductor procurement for data centers in the Middle East will grow through 2035, driven by sovereign AI cloud investments and hyperscale expansion. The shift toward specialized accelerators like GPUs and ASICs is noted as a requirement for localizing media processing and AI-driven content services within the region.
Key Takeaways
- Accelerator-class chips (GPUs, FPGAs, ASICs) will grow from 20% of procurement value in 2023 to 35% by 2027.
- Import dependence for advanced logic and memory currently exceeds 95%, with all high-end chips arriving from overseas foundries.
- U.S. BIS licensing requirements for advanced GPUs cause procurement delays of four to 12 weeks for regional cloud builders.
- New data center rack densities exceeding 30 kW are shifting demand toward chips with lower thermal design power (TDP) and liquid-cooling compatibility.
Why It Matters
The shift toward workload-optimized architecture signals a transition from general-purpose CPUs to heterogeneous compute stacks designed for localized AI inference and media processing. For the streaming ecosystem, this expansion provides the infrastructure needed to deploy low-latency, AI-driven content services and sovereign clouds that comply with regional data localization laws. As Saudi Arabia and the UAE compete for AI leadership, the pressure on global supply chains will intensify, particularly for high-bandwidth memory (HBM3e/HBM4). Watch for the pilot of localized sovereign assembly and test (OSAT) facilities in Saudi Arabia by 2028 as a key indicator of supply chain de-risking.
Additional Context
The Middle East's push for AI infrastructure is backed by massive capital commitments aimed at reducing reliance on global chip supply chains. Per Reuters and Introl (April 2026), the UAE and the United States recently unveiled a 5-gigawatt AI campus in Abu Dhabi, spanning 10 square miles, which will utilize NVIDIA's Grace Blackwell systems. This project is a centerpiece of the UAE's strategy to host the largest AI infrastructure outside the U.S., supported by a $15.2 billion investment commitment from Microsoft through 2029 for cloud and AI development. Saudi Arabia is pursuing a parallel track through its sovereign wealth fund, the Public Investment Fund (PIF). In February 2024, the PIF launched 'Alat,' a manufacturing company tasked with creating a global hub for electronics and advanced industries. Per the Saudi Gazette (February 2026), the National Semiconductor Hub in Riyadh aims to attract 50 semiconductor firms by 2030 to build domestic design expertise. These efforts are complemented by a $1.5 billion partnership between Aramco Digital and Groq to establish a massive AI inference data center in the Kingdom, according to reports from early 2025. Regulatory hurdles remain a critical bottleneck for regional ambitions. Per Tom's Hardware (April 2026), U.S. Bureau of Industry and Security (BIS) licensing turnaround times for high-end AI chips like the NVIDIA H200 ballooned to 76 days in the first half of 2025. While the Trump administration reportedly eased some country-tiered restrictions in late 2025 to improve Middle Eastern access, strict cybersecurity and end-user verification protocols remain in place to prevent the re-export of sensitive technology to restricted entities. This regulatory friction is driving the regional interest in localizing the semiconductor value chain.
Read full article at indexbox.io
Get this in your inbox → Subscribe
Enjoy our coverage?
Add StreamingMeme as a preferred source on Google to see more of our streaming news at the top of your Search results.
Add as preferred source