Saudi Arabia Semiconductor Market Assessment, By Type [Intrinsic, Extrinsic], By Components [Memory Devices, Logic Devices, Analog IC, MPU, Discrete Power Devices, MCU Sensors, Others], By Node Size [180 nm, 130 nm, 90 nm, 65 nm, 45/40 nm, 32/28 nm, 22/2

Saudi Arabia Semiconductor Market Assessment, By Type [Intrinsic, Extrinsic], By Components [Memory Devices, Logic Devices, Analog IC, MPU, Discrete Power Devices, MCU Sensors, Others], By Node Size [180 nm, 130 nm, 90 nm, 65 nm, 45/40 nm, 32/28 nm, 22/20 nm, 16/14 nm, 10/7 nm, 7/5nm, 5nm] , By End-user [Networking and Communications, Consumer Electronics, Automotive, Data Processing, Aerospace, Medical, Military and Defense, Others], By Region, Opportunities and Forecast, 2017-2031F

Saudi Arabia semiconductor market is projected to witness a CAGR of 10.51% during the forecast period 2024-2031, growing from USD 4.45 billion in 2023 to USD 9.90 billion in 2031. Saudi Arabia, in a move to cut reliance on imports and further diversify its economy in line with Vision 2030, is focusing on the development of semiconductors. The government of the country announced that at least 50 semiconductor design companies, with the help of a deep tech venture capital fund, will be completed by 2030. The initiative offers attractive incentives to pioneering talent and expertise. Through substantial investments in education and research, Saudi Arabia is laying the foundation for an excellent semiconductor ecosystem which is likely to support its technological aspirations and economic diversification goals. Thus, local talent empowerment comes into play, training 5,000 engineers and creating chip design innovations. The push is essential to provide a thrust to domestically manufactured semiconductors, which, in turn, will establish Saudi Arabia as a prominent player in the field of semiconductors.

The Advent of 5G Technology is Augmenting the Market Growth

The main factors affecting semiconductor growth significantly in Saudi Arabia include 5G technology integration, since the demanding requirements for advanced chips become necessary for high-speed connectivity and increased data processing capabilities. With the country investments targeting infrastructure to support 5G networks, there is higher demand for semiconductors for use in various applications, including telecommunications, IoT, and smart cities. This push aligns with Saudi Arabia's Vision 2030 initiative aimed at establishing a robust domestic semiconductor industry, cutting reliance on imports, and spurring innovation.

For instance, in April 2024, Saudi Aramco and GCT Semiconductor signed the Memorandum of Understanding (MoU) to enhance the 4G and 5G ecosystem across Saudi Arabia. This would entail designing and co-developing chipsets and modules that best fit the LTE, 5G, and NTN spectrum for enabling the localization of the wireless device and IoT manufacturing. The CEO of GCT elaborated on the inclusions of AI-driven modem features aimed at enhancing communication reliability and speed. The partnership comes in line with the goals of Saudi Arabia's Vision 2030 and is intended to grow its technological capabilities rapidly and create a vibrant domestic semiconductor sector, furthering the country's aspirations for diversification and innovation.

Usage of Semiconductor in Automotive Services are Augmenting the Market Growth

Semiconductors play a major role in leading Saudi Arabia's auto sector, especially electric vehicle platforms and autonomous technologies. The country, under the Vision 2030 initiative, invests intensively in the domestic production of semiconductors to decrease its dependence on foreign imports and enhance economic diversification. This strategic focus on semiconductors will support the automotive industry and help Saudi Arabia to position itself among the global tech rivals.

For instance, in June 2023, the Chinese government invested USD 5.6 billion into Saudi Arabia in car making, along with a hefty expenditure on semiconductors. This jump shows China's bigger part in facilitating Saudi Arabia branch, contributing to the Vision 2030 plan of the country. They're working together to set up new businesses by teaming up with Chinese electric car manufacturer Human Horizons. This team-up aims to boost local electric vehicle production and improve tech skills in the country.

Fabless Semiconductor Chip Production is Expediting the Market Growth

Saudi Arabia is expediting its chip production by setting up the National Semiconductor Hub. The hub aims to support fabless chip companies that come up with new semiconductor designs. This plan is part of Saudi Arabia's bigger push to reduce its dependency on oil. The country is looking to tap into new tech and build a local chip ecosystem. To make this happen, they're offering various benefits to attract talent and money for the chip sector.

Saudi Arabia has invested almost USD 267 million to attract fabless chip-making companies in the kingdom. Moreover, Saudi Development, Research, and Authority stated that semiconductor is projected to become worth of USD 1 trillion in the next few years and KSA should play a vital role in this journey.

Government Initiatives Acting as a Catalyst

Government initiatives are crucial for developing Saudi Arabia's semiconductor market, as these initiatives aim to foster the growth of semiconductors in the country over the forecast period. Moreover, by means of these policies, the country is aiming to establish itself as a prominent player in industry.

For instance, in August 2024, Saudi Arabia arranged a wealth-fund of USD 100 billion for the Alat project. The goal of this project is to meet expanding domestic demand and establish the country as a global hub for semiconductor research and manufacturing. Moreover, Alat has collaborated with King Abdulaziz City for Science & Technology to enhance the local expertise and infrastructure required for semiconductor design and manufacture.

Riyadh to Lead the Market at all Aspects

Riyadh, the capital of Saudi Arabia, leads the semiconductor market in all aspects and is anticipated to maintain its dominance over the forecast years due to its strategic locations, abundant resources, and strict government policies. One of the most prominent initiatives taken by the government in Riyadh is the investment fund of USD 266.37 million (approx. SAR 1 billion) to support infrastructure development of semiconductors.

Moreover, strategic partnerships with global tech firms and the reduction in dependency on foreign manufacturing are further enhancing Riyadh’s competitive edge in this highly competitive and rapidly growing semiconductor market. This, in turn clearly aligns with Saudi Arabia’s Vision 2030 goals of technological advancements and economic diversification.

Future Market Scenario (2024 – 2031F)

Saudi Arabia is developing highly advanced technologies, such as 3D printing, to produce more sustainable and efficient semiconductor components. This, in turn, is expected to cater to ample opportunities for market growth in the forecast period.

Semiconductors serve as a strategic asset in national security of KSA which is very crucial for maintaining semiconductor infrastructure and defense systems. This, in turn, can lead to ample futuristic opportunities for market prosperity.

Hefty expenditure by the government towards the semiconductor projects such as Alat is enhancing its prominence in the market by establishing Saudi Arabia as one of the prominent players in the semiconductor sector.

Key Players Landscape and Outlook

Saudi Arabian players are always vying amongst themselves to achieve a considerable market advantage. Furthermore, the emergence of new market trends has raised the rate of competition, and businesses are striving to maintain their market share.

In July 2024, Saudi Arabian Military Industries (SAMI) announced that it is planning to develop new and highly advanced semiconductor components in the radar systems. SAMI has launched a new production line to manufacture the software-defined radio systems in collaboration with L3Harris Technologies to localize 50% of the overall country's expenditure in the defense sector. This deal signifies the commitment of SAMI towards the development of local manufacturing. It ensures that by 2030, SAMI will contribute a major part for the development of Saudi Arabia’s economy through its technological advancements in the defense industry.