Saudi Arabia on the path to innovative R&D-powered global success

Saudi Arabia on the path to innovative R&D-powered global success
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A strong pillar of Saudi Arabia’s Vision 2030 is technology.
Saudi Arabia on the path to innovative R&D-powered global success
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A strong pillar of Saudi Arabia’s Vision 2030 is technology.
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Updated 28 July 2022

Saudi Arabia on the path to innovative R&D-powered global success

Saudi Arabia on the path to innovative R&D-powered global success

Saudi Arabia’s National Transformation Program has identified innovation powered by research and development as a vital enabler of its long-term socioeconomic goals.

One of Saudi Arabia’s goals, as stated in Vision 2030, is to be among the top 10 countries in the Global Competitiveness Index by 2030, increasing from 24th in 2022.

Two core components of the Global Competitiveness Index are directly related to R&D.

Saudi Arabia can improve these metrics by increasing public-private partnerships in R&D and focusing on an innovative talent pool.

Another objective stated in Vision 2030 is to have at least five Saudi universities among the top 200 universities in international rankings.

Both these objectives can be pursued to realize socioeconomic development.

Saudi Arabia’s Crown Prince Mohammed bin Salman launched a new program for the research, development and innovation (RDI) sector.

The program aims to inject an additional SR60 billion ($16 billion) into the nation’s GDP by the year 2040.

Mainly, the priorities for the RDI initiative include a yearly investment equivalent to 2.5 percent of the country’s GDP in 2040, creating job opportunities in science and technology, and ultimately facilitating the Kingdom to become the Arab world’s largest economy.

A strong pillar of Saudi Arabia’s Vision 2030 is technology.

The government is enabling entrepreneurs and seeking investment from private and public companies to develop the sector.

According to the International Data Corporation, Saudi Arabia is expected to spend $33 billion in 2022 on ICT development as the technology sector expanded by 8 percent between 2019 and 2021.

Additionally, government data highlighted that the economic sector of the nation witnessed the highest rate of growth in the first quarter of 2022 in comparison to the last 10 years due to an increase in activity in the oil sector.

A good example to learn from for national development strategies focused on nurturing innovation is China, which focuses on innovation that will have a massive impact on the economy and national competitiveness.

In recent years, substantial public and private sector investment in R&D has seen China establish R&D primacy and global innovation leadership, particularly in the technology domain through technologies like artificial intelligence and 5G.

In AI, China is fast narrowing the substantial lead the West, mainly the US, had on its research. 

Chinese researchers now publish more papers on AI and secure more patents than their US counterparts and the country is poised to become a leader in AI-powered enterprises. 

China also accounted for nearly one-fifth of global private investment funding in 2021, attracting $17 billion for AI startups, a promising direction that Saudi Arabia is already taking.

Saudi Arabia can similarly use AI to accelerate its digital economy.

The Middle East is projected to accrue 2 percent of the total global benefits of AI in 2030, equivalent to $320 billion, with Saudi Arabia set to have the largest gains during that period with AI contributing over $135.2 billion to its economy, according to a PwC report.

The growing ecosystem in the Kingdom concluded its best year in terms of venture funding and deals in 2021, growing about fourfold and attracting around $548 million in funding, data platform Magnitt said in its annual report for the Kingdom. 

Saudi Arabia aims to attract the “very best” national and international talent, and cooperate with and co-invest in major research centers, global and private companies, and nonprofits. Startups would be prioritized. 

Saudi Arabia aims to attract a $20 billion investment in data and AI as outlined under the National Strategy for Data and AI. The strategy aims to transform its workforce by training and developing a pool of 20,000 AI and data specialists and experts, with 5,000 of those being highly qualified AI and data scientists. 

Such focus on AI will enable Saudi enterprises to remain competitive by improving decision-making processes, solving administrative problems, reducing costs and boosting service delivery.

The other sector China has taken a global lead in is 5G innovation. China is home to the world’s most extensive 5G mobile infrastructure, with 1.43 million 5G base stations installed as of 2021, accounting for over 60 percent of the global total. 

As a result, the Chinese mobile ecosystem has become a critical driver of 5G evolution globally. 

China is set to extend its 5G leadership to next-generation 6G networks; the country announced a 6G strategy in 2019, even before industry standards or definitions had been established.

It is leading in 6G-related R&D. A report by Nikkei shows that China topped the list with 40.3 percent of 6G patent filings, well ahead of the US with 35.2 percent.

Chinese enterprises have followed suit, with China’s corporate R&D outpacing GDP in 2019-2020.

The corporate R&D/GDP ratio rose to 1.84 percent, from 1.26 percent in 2010, increasing faster than most developed countries. 

An excellent example is Huawei, a Chinese yet global company demonstrating the direct link between R&D and innovation. 

Huawei’s R&D expenditure reached $22.4 billion in 2021, representing 22.4 percent of total revenue and bringing its total R&D expenditure over the past 10 years to over $132.5 billion.

The company ranked second in the 2021 EU Industrial R&D Investment Scoreboard.

In 2021, Huawei had about 107,000 employees, representing approximately 54.8 percent of the entire workforce, working in R&D. 

Today, Huawei maintains one of the largest patent portfolios globally.

By 2021, Huawei held more than 110,000 active patents across over 45,000 families.

In 5G, Huawei was the frontrunner, having invested more than $600 million into 5G technology research between 2009 and 2013.

It was followed by an additional $1.4 billion into 5G product development in 2017 and 2018. 

The company has also taken the lead in 6G innovation after an early 2019 start in 6G R&D and announced plans to launch its 6G networks in 2030.

Not only has R&D powered Huawei’s past success, it is also powering its business diversification drive. 

From its R&D ventures, Huawei has nurtured new business units such as Huawei Digital Power, which integrates digital and power electronics technologies, developing clean power, enabling energy digitization and carbon neutrality directions to drive energy revolution for a better, greener future.

In this regard, Huawei signed an agreement with Saudi Red Sea New City on an energy storage project.

The energy storage capacity of the project reaches 1300 MWh, which is by far the world’s largest energy storage and off-grid energy storage project. 

Also, Huawei’s Rotating Chairman Guo Ping has announced plans to launch a cloud region in Saudi Arabia, noting that the top 10 percent of organizations embracing digitization are growing their revenue as much as five times faster than those not.

Following the Chinese government’s initiative to empower startups, Huawei announced a new support program in the region last year called SPARK.

It is part of the HUAWEI CLOUD Oasis Program launched in September 2021, which plans to invest $15 million over the following three years to accelerate the development of technology enterprises and ecosystems in the Middle East.

The company contributes to developing ICT talent in Saudi Arabia and has successfully implemented the Saudi Talent Enabling Program (STEP), which aims to build the ICT talent ecosystem in the Kingdom. 

Such public-private collaborations can enable the country to bridge the gaps between the demand for the future digital workforce and the supply of local talents. 

Also, Huawei has recently added a new category to their 2022 global Apps Up content — “Best Arabic App” — to encourage regional developers to create app solutions that address the region’s needs and enrich Arabic content.

Innovation is also key to building resilient economies fortified against global disruptions. 

R&D enabled China to circumvent the US-led campaign to isolate Chinese firms from the global technology market. China’s public and private sector enterprises responded to the challenge by pursuing technology self-sufficiency, particularly in semiconductors. 

China is traditionally the world’s largest importer of chipsets. However, last year saw Chinese imports of integrated circuits (I.C.s) shrink 9.6 percent in volume in Q1 of 2022 from a year ago, according to Chinese customs data, reversing a 33.6 percent increase in the same period in 2021.

The reduction in import volume mainly comes from China’s forceful push toward technological self-sufficiency.

Saudi Arabia is an ambitious nation that is currently making impressive leaps and bounds toward the future and innovation.

Owing to the positive changes the Kingdom has seen during the year 2020-2021, it has jumped from 83rd to 63rd place, according to the index of the Freest Economies of the Heritage Foundation. 

The country has already made impressive progress in forging a knowledge-based economy in the last decade, thanks to ambitious government initiatives.

With a solid foundation of a tech-savvy population, a world-class ICT infrastructure, and the biggest economy in the region, innovation will be the spark that accelerates this objective.