Why the Middle East is Betting on AI in Supply Chains
The Middle East’s long-standing reliance on oil is giving way to an ambitious technological pivot. Gulf states are investing in AI infrastructure as a potential replacement export — and they are building the supply chains to match.
"Compute is the new oil," asserts Mohammed Soliman, Senior Fellow at the Middle East Institute in Washington DC.
His words cut to the heart of the region's strategic recalibration. As oil declines in global relevance, the race is on to turn compute - the backbone of modern AI systems - into a new resource for export.
Just as crude once underpinned global industrial growth, compute now powers the information economy. High-end chips, data centres and vast processing power are becoming the lifeblood of global supply chains, from manufacturing to logistics to consumer services.
With deep capital reserves, advanced infrastructure and an eye on diversification, Gulf states are positioning themselves as suppliers of this 21st-century commodity.
Stargate sets up the infrastructure for global AI trade
The clearest signal of this shift is the Stargate project — a multi-billion-dollar initiative unveiled during US President Donald Trump's 2025 visit to the United Arab Emirates (UAE). The project, a joint venture between the UAE and the United States, is described as the largest AI infrastructure hub outside North America.
At the heart of Stargate is a new data centre cluster in Abu Dhabi designed to host AI workloads from companies including OpenAI. These data centres are essential for training and deploying large language models — the core of today’s generative AI tools.
G42, a UAE-based firm with state backing, is funding the build and has secured support from major US tech firms:
Nvidia will provide the chips
Cisco and Oracle are building the first construction phase
Japan's SoftBank is involved as a strategic partner
This kind of infrastructure is key to making compute a tradable commodity. The chips from Nvidia enable high-volume training of AI models. The data centres, which act as physical warehouses of compute, make that power accessible for companies and governments across borders.
Hassan Alnaqbi, CEO of Khazna, the UAE’s largest data centre operator and majority-owned by G42, draws a direct line between this infrastructure and supply chain development.
"Just like Emirates helped turn the UAE into a global hub for air travel, now the UAE is at a stage where it can become an AI and data hub," he says.
Khazna operates 29 data centres across the UAE, many of which are already integrated into the new project. These sites function like shipping terminals for compute: receiving, storing and distributing AI capabilities to global clients.
Saudi Arabia and UAE take control of digital exports
The UAE isn’t alone in building its AI supply lines. Saudi Arabia is accelerating its own strategy through the Public Investment Fund’s launch of Humain — a national AI company with plans to build “AI factories” powered by hundreds of thousands of Nvidia chips.
This hardware-heavy approach signals a shift in how Gulf sovereign funds operate. Rather than acting as passive investors in American or Chinese tech, they are now building local capabilities to serve as exporters of AI infrastructure and services.
State-owned fund Mubadala, which backs G42, has also partnered with Microsoft to launch MGX — a US$100bn AI venture. The goal is to serve AI markets beyond the region using Middle Eastern compute power.
These developments are reshaping the region’s supply chain logic. Instead of pumping oil to the West, the Gulf aims to transmit compute via data centres and chip-enabled networks. AI factories, storage facilities, training sites and high-capacity cables are all part of this emerging architecture.
But the region faces hurdles. One of the most pressing is a shortage of local AI expertise. Hiring talent for large-scale model training and infrastructure development is both costly and competitive.
For now, Gulf states are relying on immigration to close the gap. The UAE, for instance, is offering “golden visas” to lure overseas experts with long-term residency and regulatory incentives.
"Building world-class digital and AI infrastructure will act as a magnet," says Baghdad Gherras, Chief Data Officer at Medad Holdings LLC. Still, success hinges on securing the people able to run the systems and expand capacity.
Aligning with US tech stack reshapes strategic ties
These efforts are unfolding amid rising tensions between the United States and China over global AI dominance.
Trump’s visit signalled that the US is pushing for tighter AI alliances — and the UAE has responded by stepping back from China-aligned tech platforms, including hardware from Huawei.
"It's basically us trying to bring a promising, rising AI region – which is the Gulf – into the American AI stack, to be on Team America AI," says Mohammed.
The "AI stack" refers to the full pipeline of AI production: chips, data infrastructure, AI models and software. US companies dominate this stack and Gulf governments are now aligning their supply chains to match it.
Through projects like Stargate and ventures like Humain and MGX, Gulf states are redrawing their export maps — placing compute at the centre and building the supply chains to distribute it globally.
As the oil era fades, the region is laying out the cables, silicon and partnerships to trade in something else: processing power. For the Middle East, that trade begins with infrastructure.
