Saudi Arabia makes significant moves in semiconductor sector with strategic investments

Saudi Arabia makes significant moves in semiconductor sector with strategic investments
Semiconductors, which are essential components for powering AI software, electric vehicles, smartphones, and various advanced technologies, have created intense competition among nations and tech giants. Shutterstock
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Updated 12 August 2024
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Saudi Arabia makes significant moves in semiconductor sector with strategic investments

Saudi Arabia makes significant moves in semiconductor sector with strategic investments
  • Concentrated supply chain has prompted Saudi Arabia, under its Vision 2030 initiative, to heavily invest in developing local semiconductor manufacturing capabilities

RIYADH: Saudi Arabia is rapidly emerging as a key player in the global semiconductor industry, driven by ambitious initiatives aimed at establishing a strong foothold in this crucial sector.

Semiconductors, which are essential components for powering AI software, electric vehicles, smartphones, and various advanced technologies, have created intense competition among nations and tech giants. Currently, Taiwan leads with 46 percent of global semiconductor foundry capacity, followed by China, South Korea, the US, and Japan.

This concentrated supply chain has prompted Saudi Arabia, under its Vision 2030 initiative, to heavily invest in developing local semiconductor manufacturing capabilities. The goal is to reduce dependency and enhance economic diversification.




Frederic Ozeir, partner and head of automotive and manufacturing industries for India, Middle East, Africa region at Oliver Wyman. Supplied

“Semiconductors are the foundation of modern technology and crucial for economic growth, representing a $500 billion industry today, projected to reach $1 trillion by 2030,” said Frederic Ozeir, partner and head of Automotive and Manufacturing Industries for India, Middle East, and Africa region at Oliver Wyman, in an interview with Arab News.

He added: “For a modern economy, they (semiconductors) are fundamental to nearly all electronics across key sectors like computing, telecom, energy, automotive, and healthcare.”

Ozeir explained that these tech components drive technological innovation, advancing AI, 5G, and autonomous vehicles with significant improvements in speed, efficiency, and capabilities.

Semiconductors also serve as strategic assets for national security, essential for defense systems and infrastructure, with applications ranging from communications equipment to advanced weaponry. Economically, they drive growth, employment, and global competitiveness, similar to oil in energy-dominant economies.

At the forefront of Saudi Arabia’s semiconductor push is the $100 billion Alat project, led by the Kingdom’s wealth fund. Alat aims to address rising domestic demand and position the nation as a global hub for semiconductor innovation and production.

In collaboration with King Abdulaziz City for Science and Technology, Alat is focused on developing local talent and infrastructure necessary for semiconductor design and manufacturing.

“The semiconductor industry represents a transformative opportunity for Saudi Arabia's industrial sector,” emphasized Alat CEO Amit Midha. “Our partnership with KACST is pivotal in advancing our capabilities across key semiconductor technology segments, including power, perception, and processing.”

Saudi Arabia’s semiconductor ambitions extend beyond economic diversification to emphasize a strategic imperative for enhancing national sovereignty and technological independence.

To this end, the Kingdom has launched a billion-riyal investment fund dedicated to semiconductor companies and established the National Semiconductor Hub. At least 50 semiconductor design companies will be established in Saudi Arabia by 2030, supported by a deep tech venture capital fund exceeding SR1 billion ($266 million) as part of a new tech hub.

These initiatives are complemented by efforts to attract global expertise through targeted residency programs aimed at accelerating knowledge transfer and capacity building.

“Saudi Arabia has inherent competitive advantages for building a successful semiconductor industry,” Ozeir noted. “The country also offers competitive utilities and infrastructure, providing reliable energy, clean water, and extensive land. Political stability and government support are also key, with a stable regulatory environment that includes direct incentives and efficient processes,” he emphasized.

Ozeir elaborated that to develop this sector, the nation needs to create a suitable enabling environment by addressing the need for a specialized workforce, including process engineers, material scientists, and precision technicians. “Additionally, the country must develop its industry ecosystem and ensure access to international markets, as local demand for semiconductors is still nascent,” he said.




Talat Hafiz, Saudi-based Economist. Supplied

Talat Zaki Hafiz, a Saudi economist, highlighted the broader economic benefits, stating: “The semiconductor industry will contribute significantly to both the Kingdom’s economy and the industrial sector in general, especially as Saudi Arabia is engaging and promoting several industries that require significant and sizable amounts of semiconductors.”

For instance, Saudi Arabia is advancing into high-tech industries such as electric cars, helicopters, drones, and advanced ships, which require substantial amounts of semiconductors. This shift will drive significant demand for semiconductors, aligning with Vision 2030’s goals of economic diversification and industrial advancement, according to Hafiz.

The urgency of Saudi Arabia’s semiconductor push is underscored by global supply chain disruptions, which have exposed vulnerabilities in dependent economies. By developing a robust semiconductor ecosystem, Saudi Arabia aims not only to secure its supply chain but also to emerge as a leading exporter of high-tech components in the global market.

“The collaboration with KACST represents a cornerstone in Saudi Arabia’s journey towards semiconductor leadership,” said Muneer bin Mahmoud Al-Dosouqi, president of KACST. “It underscores our commitment to fostering a sustainable industrial ecosystem based on advanced technologies and clean energy sources,” he added.

Ozeir outlined the strategic approach for the coming years: “Saudi Arabia should adopt an integrated, cluster-based approach to develop its semiconductor industry. Initially, this involves front-end manufacturing, backward integration into wafer production and design, and then expanding capacity to forward-integrate into leading-edge fabrication and back-end manufacturing in the medium term.”

Oliver Wyman’s partner noted that the Kingdom could also implement supportive policies similar to leading semiconductor nations, combining direct grants for FDI (foreign direct investments), low-interest loans, investment tax credits, and sovereign funds that boost international investments.

“Specialized visa schemes, financial benefits for foreign manpower with expertise, and elite university programs in semiconductor-related fields will be essential to drive this development,” he added.

Saudi Arabia’s proactive approach in the semiconductor sector reflects a strategic vision aimed at enhancing its global competitiveness. 

“Being the largest economy in the Middle East and the fastest-growing economy in the Arab world and internationally, the Kingdom can easily succeed in becoming a competitive player in the global semiconductor market,” Hafiz said.

He added: “It possesses the resources needed for manufacturing semiconductors that can help and support its efforts to play a competitive role and obtain leadership in the global semiconductors market and industry.”

Despite hosting the world’s largest reserves of oil and emerging as a global energy superpower, Saudi Arabia has been very active in pursuing and building capacities in clean energy and reducing the carbon impact on both humanity and the environment.

Hafiz highlighted that the Kingdom is undertaking various actions, such as implementing the Circular Carbon Economy and the Saudi Green Initiative, to achieve its goal of zero neutrality by 2060. He expressed confidence in Saudi Arabia’s capability and eventual success in integrating sustainable practices and clean energy sources into its semiconductor manufacturing processes.

As global demand for high-performance chips continues to surge, the Kingdom’s proactive approach underscores its determination to carve out a prominent place in the global semiconductor landscape. “Several new national initiatives were announced in the Semiconductor Future Forum, confirming the Kingdom’s desire to move forward to develop and localize this industry,” Hafiz shared.

One of these initiatives is the National Capabilities Center for Semiconductors, which aims to “develop and localize the electronic chip industry in the Kingdom,” according to the economist.

In conclusion, Saudi Arabia’s strategic investments and partnerships in the semiconductor industry reflect a bold vision aimed at securing its economic future and asserting its technological prowess on the global stage. As the Kingdom continues to advance its semiconductor capabilities, it stands poised to play a significant role in driving innovation and shaping the next generation of high-tech industries worldwide.

Hafiz expressed his optimism for the future: “I believe that the Kingdom has a bright future in the semiconductor industry over the next decade, simply because it has dedicated its efforts to boost its capabilities in developing such an industry in the Kingdom through building local talents and relying on its longstanding expertise in several industries, especially in high-tech related industries.”


Saudi e-commerce sales using Mada cards hit $53bn in 2024

Saudi e-commerce sales using Mada cards hit $53bn in 2024
Updated 07 February 2025
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Saudi e-commerce sales using Mada cards hit $53bn in 2024

Saudi e-commerce sales using Mada cards hit $53bn in 2024
  • Year-on-year growth of 25.82%, according to Saudi central bank data
  • Spending power, nation’s economic strength are ‘fueling market growth’

RIYADH: E-commerce sales using Mada cards in Saudi Arabia reached SR197.42 billion ($52.64 billion) in 2024, a year-on-year growth of 25.82 percent, according to data from the Kingdom’s central bank.

Figures released by the institution showed that in December, sales totaled SR19.37 billion, representing a 42.06 percent increase compared to the same month in the previous year.

These figures include payments for online shopping, in-app purchases, and e-wallet transactions, but exclude transactions using credit cards such as Visa and MasterCard.

Mada, the Kingdom’s national payment card system, supports both debit and prepaid services within its network. The cards utilize near-field communication technology for contactless payments, enabling secure transactions at both physical retailers and online.

Mohammed Dhedhi, partner in the consumer and retail practice team at Kearney Middle East and Africa, told Arab News: “The growing spending power in Saudi Arabia, driven by factors such as dual-income households and higher overall economic strength, is fueling market growth.”

He added: “Additionally, the proliferation of NFC-capable devices has significantly boosted the penetration of digital payment channels like Mada, further supporting the shift toward a more digital economy.”

In addition to the surge in sales, the number of e-commerce transactions also experienced a significant rise, increasing by 28.86 percent year-on-year to nearly 1.13 billion transactions in 2024.

December saw a 30.47 percent annual increase, reaching 105.73 million transactions.

According to Dhedhi: “Today, local Mada cards account for over 90 percent of cards issued in the country and over 95 percent of the total transactions made. One of the main reasons for Mada’s popularity is because of how convenient it is to use.”

He added that Mada is widely accepted both in-store and online across Saudi Arabia, providing secure transactions as it is operated by Saudi Payments, a subsidiary of the Saudi Central Bank.

The growing adoption of Mada aligns with the government’s push toward a cashless society, promoting the transition from cash to digital payments.

Dhedhi explained that the COVID-19 pandemic significantly accelerated e-commerce penetration in Saudi Arabia, driving faster digital adoption across various sectors.

This growth was further supported by increased investments from both regional and global players looking to expand their operations.

He noted that in 2022, noon.com opened a Customer Fulfillment Center in Riyadh to improve delivery speed and meet the growing demand from consumers.

Saudi Arabia’s growing spending power, supported by factors including dual-income households and a robust economy, continues to drive market expansion.

At the same time, the widespread adoption of NFC-enabled devices has propelled the use of digital payment solutions like Mada.

As a result, the Kingdom is witnessing a rapid shift toward a more digital economy, with seamless and secure transactions becoming an integral part of the evolving e-commerce landscape.

The rise in e-commerce activity aligns with Saudi Arabia’s goal to make digital transactions account for 80 percent of the retail sector by 2030, with 70 percent conducted online by the same year.

According to the International Trade Administration, the Saudi e-commerce market, valued at $5.15 billion in 2023, accounted for 6 percent of the Kingdom’s $92.6 billion retail market.

Dhedhi said: “To improve online shopping experiences, Saudi Arabia’s Ministry of Commerce has introduced reforms focusing on refunds, delivery options, and payment choices.”

He added: “These changes aim to address consumer concerns such as unclear warranties, limited delivery coverage, slow complaint resolutions, and delayed refunds. Retailers are now required to submit performance reports and conduct consumer awareness campaigns.”

According to Dhedhi, Saudi Arabia’s e-commerce market growth will be driven primarily by appliances and electronics, which will account for 23 percent of total growth, with a compound annual growth rate of 8 percent from 2024 to 2028.

The fashion sector is expected to contribute 18 percent, also growing at 8 percent CAGR, while health and beauty will make up 14 percent, expanding at a much faster 16 percent CAGR.

The dominance of electronics and appliances reflects a strong demand for advanced technology and gadgets, particularly among younger, tech-savvy consumers.

In addition, the rising popularity of beauty and home care products aligns with an increasing focus on self-care and wellness across the Kingdom.

Meanwhile, the food and beverage segment is projected to experience the highest growth rate at 25 percent CAGR, although its overall market size remains smaller compared to other leading categories, according to Dhedhi.

“The rise in food and beverage e-commerce reflects a growing demand for convenience. Quick commerce has been growing rapidly, and while it historically took players much longer to achieve profitability, the current focus on dark stores and improved unit economics is accelerating this process,” Dhedhi said.

He also noted that while this shift has accelerated growth in the sector, it has also intensified competition. This dynamic ultimately benefits market players in Saudi Arabia by fostering innovation and enhancing service quality.

According to the International Trade Administration, Saudi Arabia’s digital economy is expanding rapidly, driven by substantial government investments and widespread adoption of emerging technologies.

As of 2023, the Kingdom’s Information and Communications Technology sector was the largest and fastest-growing in the Middle East and North Africa region, valued at $40.94 billion and contributing 4.1 percent of gross domestic product, the report stated.

The Kingdom ranked second among G20 countries on the UN International Telecommunication Union’s ICT Development Index in 2023, highlighting its strong digital infrastructure.

Over the past six years, Saudi Arabia has invested $24.8 billion in this area, leading to a 99 percent internet penetration rate and mobile internet speeds of 215 megabits per second, nearly double the global average.

These advancements place the Kingdom among the top 10 countries globally for mobile internet speed, according to the ITA.

Saudi Arabia was an early adopter of 5G technology, with coverage reaching 77 percent of the country — significantly above the global average — and 94 percent in Riyadh, positioning it among the world’s leading cities for 5G accessibility.

This high-speed internet expansion is fueling growth in e-commerce, telecommunications, and digital services, the ITA added.

The number of e-commerce users is projected to reach 34.5 million by 2025, with penetration rising from 66.7 percent in 2023 to 74.7 percent by 2027, according to the report.

Digital payments are also surging, aligning with Vision 2030’s goal of a cashless society. Electronic payments in retail transactions surpassed 57 percent in 2021, exceeding the 55 percent target set by the Financial Sector Development Program.

This shift is expected to further accelerate e-commerce growth, attracting more investment in digital financial services.

Dhedhi said: “Millennials, who constitute around 50 percent of the population, are key drivers of e-commerce growth due to their digital fluency and tech-savviness.”

He added: “Expats, on the other hand, prioritize the delivery experience more than locals and show a strong preference for international brands or diverse product offerings, contributing to a broader assortment in the offerings.”

Dhedhi said quick commerce players are tapping into the demand for fast delivery, affordable subscriptions, and influencer partnerships to target younger consumers.

By offering low delivery costs, they are setting new convenience standards. Chinese e-commerce giants including Shein and Temu have successfully attracted Gen Z and millennials with trendy, affordable products, despite occasional compromises in product quality, he said.

Urbanization and rising female workforce participation are further fueling the shift to online retail, with families increasingly relying on e-commerce for groceries, fashion, and household items.

Dhedhi noted that these demographic shifts are broadening the customer base, diversifying consumer behavior, and fueling the expansion of Saudi Arabia’s e-commerce sector, which plays a pivotal role in the Kingdom’s economic transformation.


Oil Updates — crude set for 3rd straight weekly decline amid tariff concerns

Oil Updates — crude set for 3rd straight weekly decline amid tariff concerns
Updated 07 February 2025
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Oil Updates — crude set for 3rd straight weekly decline amid tariff concerns

Oil Updates — crude set for 3rd straight weekly decline amid tariff concerns

LONDON: Oil prices rose on Friday after new sanctions were imposed on Iran’s crude exports but were on track for a third straight week of decline, hurt by US President Donald Trump’s renewed trade war on China and threats of tariffs on other countries.

Brent crude futures were up 51 cents, or 0.7 percent, at $74.80 a barrel by 3 p.m. Saudi time, but were poised to fall 2.6 percent this week. US West Texas Intermediate crude rose 48 cents, or also 0.7 percent, to $71.09 a barrel, down 2.1 percent on a weekly basis.

The US Treasury said on Thursday it was imposing new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude oil per year to China, in an incremental move to increase pressure on Tehran.

“Trump has talked about maximum pressure (on Iran). The market takes that quite seriously,” said Michael Haigh, global head of commodities research at Societe Generale. The French bank projects that Iranian oil exports are set to halve.

“The imposition of tariffs and the pauses should be bullish for the oil market because it adds uncertainty. But you haven’t seen this response because of demand concerns. Tariffs and tit for tat responses from nations, it hurts global GDP ... and oil demand,” Haigh added.

Trump had announced a 10 percent tariff on Chinese imports as part of a broad plan to improve the US trade balance, but suspended plans to impose steep tariffs on Mexico and Canada.

“Downside pressure has stemmed from the news flow around tariffs, with concerns over a potential trade war fueling fears of weakening oil demand,” analysts at BMI said in a note on Friday.

Oil prices settled lower on Thursday after Trump repeated a pledge to raise US oil production, unnerving traders a day after the country reported a much bigger-than-anticipated jump in crude stockpiles.

The benchmarks were also under pressure from swelling US crude inventories, which rose sharply last week as demand softened on ongoing refinery maintenance.


PIF’s SIRC, Germany’s Concord Blue to launch first phase of sewage to renewable hydrogen station

PIF’s SIRC, Germany’s Concord Blue to launch first phase of sewage to renewable hydrogen station
Updated 07 February 2025
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PIF’s SIRC, Germany’s Concord Blue to launch first phase of sewage to renewable hydrogen station

PIF’s SIRC, Germany’s Concord Blue to launch first phase of sewage to renewable hydrogen station
  • Both parties will offer innovative solutions that contribute to environmental sustainability and promote the circular carbon economy
  • Plan will see around 100 million tonnes of waste recycled annually

RIYADH: A new agreement between the Saudi Investment Recycling Co. and the German company Concord Blue will lead to the construction of a station in the Kingdom that converts sewage into renewable hydrogen.

The Public Investment Fund firm inked the memorandum of understanding with the engineering company for the first phase of the development, whereby the plant will use Concord Blue Reformer technology to develop sludge treatment projects resulting from sewage and other organic waste, according to a statement.

Concord Blue Reformer’s non-combustion reforming process uses the principles of staged reforming to efficiently and cleanly recycle waste into energy.

This falls in line with SIRC’s goal of actively leading the charge in implementing impactful waste reduction strategies, accelerating the widespread adoption of renewable energy solutions, and championing the principles of environmental justice.

It also aligns with the comprehensive plan announced by the Kingdom’s Ministry of Environment in January 2024, which targets recycling a significant portion — up to 95 percent — of the country’s waste.

“Under this memorandum, SIRC will provide sewage and agricultural waste as raw materials, while Concord Blue will convert this waste into renewable hydrogen, in addition to transferring knowledge in this field and training national cadres to build, operate and maintain facilities for converting waste into hydrogen,” said Faisal Al-Solami, executive vice president of finance and strategic planning at SIRC.

When fully implemented, the plan will see around 100 million tonnes of waste recycled annually, showcasing the nation’s commitment to sustainability.

Under the terms of the newly signed MoU, both parties will offer innovative solutions that contribute to environmental sustainability and promote the circular carbon economy by producing high-quality green hydrogen and manufacturing biochar and industrial-activated coal. 

Al-Solami said signing the agreement is a key step toward achieving Vision 2030’s recycling and sustainability goals, as it promotes environmentally friendly energy solutions from waste, reduces emissions, and supports an eco-conscious economy.

This comes as the first phase of the project will achieve several goals, including reducing the volume of waste sent to landfills, enhancing hydrogen production on a large scale, and developing innovative solutions to reduce carbon emissions.

It will also support local manufacturing projects and contribute to achieving a zero-carbon future by producing clean fuel that supports the transition to a hydrogen economy in the industrial and transportation sectors.


Closing Bell: Saudi main index edges up to close at 12,433

Closing Bell: Saudi main index edges up to close at 12,433
Updated 06 February 2025
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Closing Bell: Saudi main index edges up to close at 12,433

Closing Bell: Saudi main index edges up to close at 12,433

RIYADH: Saudi Arabia’s Tadawul All Share Index edged up on Thursday, gaining 19.18 points, or 0.15 percent, to close at 12,433.58. 

The total trading turnover of the benchmark index was SR6.88 billion ($1.83 billion), as 123 of the listed stocks advanced, while 96 retreated.  

The MSCI Tadawul Index increased by 2.23 points, or 0.14 percent, to close at 1,545.99. 

The Kingdom’s parallel market Nomu also rose, gaining 135.68 points, or 0.43 percent, to close at 31,386.27. This comes as 40 of the listed stocks advanced, while 39 retreated. 

The best-performing stock was Almasane Alkobra Mining Co., with its share price surging by 7.49 percent to SR68.9. 

Other top performers included the Thimar Development Holding Co., which saw its share price rise by 5.76 percent to SR56.9, and Makkah Construction and Development Co., which saw a 4.42 percent increase to SR108.60. 

Mutakamela Insurance Co. saw the largest decline of the day, with its share price dropping 2.19 percent to SR18.72. 

The Tanmiah Food Co. saw a decline of 1.99 percent, with its share price dropping to SR127.80, while the Saudi Industrial Investment Group fell by 1.69 percent to SR17.40. 

On the announcements front, Saudi Industrial Investment Group reported its annual financial results for 2024, with net profits reaching SR11 million, matching the previous year’s figure. 

Saudi Arabian Mining Co., known as Ma’aden, also announced the official launch of its US dollar-denominated trust certificates offering.

The offering is available to eligible investors both in Saudi Arabia and internationally, as part of Ma’aden’s strategic initiative to strengthen its financial position and expand investment opportunities. 

To facilitate the issuance, Ma’aden has appointed 10 companies as joint lead managers for the transaction, including Citigroup Global Markets Limited, HSBC Bank, Al Rajhi Capital Co., BNP Paribas, and GIB Capital.

The other five include J.P. Morgan Securities plc, Natixis, Saudi Fransi Capital, SNB Capital Co., and Standard Chartered Bank. 

In a statement to Tadawul, the company stated that the sukuk will be issued in two tranches, with maturities of 5 and 10 years. The minimum subscription amount is set at $200,000, with the final value and terms of the offering to be determined based on market conditions. 

Following the announcement, Ma’aden’s shares closed at SR48.15, up 4.05 percent in today’s session. 


Saudi crown prince launches ‘King Salman Automotive Cluster’ at KAEC

Saudi crown prince launches ‘King Salman Automotive Cluster’ at KAEC
Updated 06 February 2025
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Saudi crown prince launches ‘King Salman Automotive Cluster’ at KAEC

Saudi crown prince launches ‘King Salman Automotive Cluster’ at KAEC

RIYADH: Saudi Crown Prince Mohammed bin Salman has named the automotive manufacturing hub within King Abdullah Economic City the “King Salman Automotive Cluster,” the Saudi Press Agency reported on Thursday.

The King Salman Automotive Cluster will serve as a pivotal center for the automotive industry, housing the headquarters and manufacturing facilities for both local and international companies.

Notable brands, such as Ceer—the first Saudi electric vehicle brand—and Lucid Motors, which opened its first international factory in KAEC in 2023, are set to be key players in the cluster.

The site will also host multiple Public Investment Fund joint ventures with global manufacturers, including a highly automated factory with Hyundai Motor for car production in Saudi Arabia and a partnership with Pirelli to establish a tire factory.

This new cluster marks a significant milestone in Saudi Arabia’s economic diversification efforts, supporting the development of the automotive sector and advancing sustainable transportation. It will contribute to boosting the non-oil gross domestic product and increasing exports.

The King Salman Automotive Cluster will accelerate local manufacturing capacity, promote research and development, and optimize supply chains, making them more efficient for both regional and international markets.

The project is expected to create numerous investment opportunities for the private sector, fostering the growth of promising industries within the Kingdom.

By 2035, the cumulative GDP contribution from companies within the cluster is projected to reach approximately SR92 billion.

The cluster will generate thousands of direct and indirect jobs, support local manufacturing, and boost Saudi exports, positively impacting the nation’s balance of payments.

Leveraging KAEC’s robust infrastructure and its strategic location near a well-developed port, the cluster offers significant advantages for both local private sector entities and international companies. These factors will provide ample opportunities for collaboration between partners, suppliers, and investors within the automotive industry and related sectors.

The King Salman Automotive Cluster will play a key role in advancing the National Industrial Development and Logistics Program, which aims to position Saudi Arabia as a leading industrial hub and global logistics center by fostering high-growth sectors and attracting foreign investment.