Groq, a U.S.-based semiconductor startup, has secured a $1.5 billion investment commitment from Saudi Arabia to expand its AI chip operations in the country. The Silicon Valley firm, founded by a former Alphabet AI chip engineer, is known for producing high-performance AI inference chips designed to optimize speed and execute commands of pre-trained models with remarkable efficiency. This strategic funding underscores Saudi Arabia’s growing ambitions in artificial intelligence and semiconductor technology, reinforcing its position as a key player in the global AI landscape.
Groq already has an established partnership with Aramco Digital, the technology arm of the Saudi oil giant, through which they launched a critical AI hub in the region last December. The newly announced investment will be directed towards expanding Groq’s data center in Dammam, a move that will significantly enhance Saudi Arabia’s AI infrastructure. The company’s chips, which are particularly effective in accelerating chatbot responses and executing complex language models, are subject to stringent U.S. export controls. However, Groq confirmed that it has obtained all necessary licenses to supply its advanced semiconductors to Dammam, ensuring uninterrupted growth of the project.
The announcement was made during LEAP 2025, Saudi Arabia’s flagship global technology conference, where the kingdom secured a staggering $14.9 billion in fresh AI investments. As part of this AI push, one of the key projects supported by the Dammam data center will be Allam, a bilingual AI language model developed by the Saudi government. This model is designed to operate seamlessly in both Arabic and English, reinforcing Saudi Arabia’s commitment to advancing localized AI technologies that cater to regional linguistic and cultural needs.
Groq’s expansion aligns with Saudi Arabia’s broader Vision 2030 strategy, which aims to reduce the country’s reliance on oil revenues by diversifying into high-tech industries, including artificial intelligence and semiconductor manufacturing. The kingdom has been aggressively investing in AI startups and chipmakers, recognizing the critical role these technologies play in the future of digital economies.
The U.S. semiconductor firm has also been gaining traction in the global AI market. In August, Groq reached a valuation of $2.8 billion after securing $640 million in a funding round led by Cisco Investments, Samsung Catalyst Fund, and BlackRock Private Equity Partners. With its latest deal in Saudi Arabia, Groq is positioning itself as a significant player in AI hardware development, particularly in regions looking to build sovereign AI capabilities.
Saudi Arabia’s push into AI infrastructure and semiconductor technology is indicative of a broader shift among Gulf nations, which are increasingly positioning themselves as global AI hubs. The country has already invested billions in AI research, cloud computing, and digital transformation projects, with institutions like the Saudi Data and AI Authority (SDAIA) and King Abdullah University of Science and Technology (KAUST) playing crucial roles in fostering local AI talent and research.
As Saudi Arabia deepens its engagement with AI and semiconductor development, the partnership with Groq marks a critical step in ensuring that the kingdom has access to cutting-edge chip technology. The expansion of the Dammam data center is expected to accelerate AI innovation in the region, supporting various applications from government AI initiatives to enterprise AI solutions.
With global demand for AI chips soaring, Groq’s investment deal with Saudi Arabia highlights the increasing importance of semiconductor technology in shaping the future of AI. As the U.S. and China continue their strategic competition over semiconductor dominance, Saudi Arabia’s ability to secure AI chip supply chains positions it as a formidable contender in the rapidly evolving global AI ecosystem.
