KSA Artificial Intelligence Market Outlook to 2028

KSA Artificial Intelligence Market Overview

The KSA Artificial Intelligence Market was valued at USD 1.5 billion experienced rapid growth, reflecting global trends in AI adoption and innovation. The increase in AI applications across industries such as healthcare, finance, and smart cities has been a significant driver of this expansion.

Major players in the market include IBM, Microsoft, Google, and local entities like Saudi Telecom Company (STC) and Saudi Data and Artificial Intelligence Authority (SDAIA). These companies provide various AI solutions, ranging from cloud-based AI services to AI-powered analytics platforms tailored to meet the growing demands of Saudi businesses across different sectors.

In March 2024, Saudi Arabia announced that its AI sector is expected to contribute $135.2 billion to the Middle Easts economy by 2030. The country is leveraging its Vision 2030 initiative to become a leader in AI, with investments exceeding $20 billion. This includes groundbreaking AI integration in smart cities, healthcare, and public services.

Riyadh is the dominant region in the market by the several major AI-driven projects, including smart city initiatives and AI research centers. Riyadhs leadership in the AI market is driven by government investments, a growing pool of tech talent, and its status as the central hub for business and innovation in Saudi Arabia.

KSA Artificial Intelligence Market Segmentation

The market is segmented into various factors like application, deployment type, and region.

By Application: The market is segmented by application into healthcare, finance, and smart cities. The healthcare segment dominated the market share, driven by the rapid adoption of AI-powered diagnostic and treatment tools. The rise in demand for personalized healthcare solutions, especially in telemedicine and robotic surgery, has been a key factor for its dominance.

By Deployment Type: The market is segmented by deployment type into cloud-based, on-premise, and hybrid. Cloud-based deployment dominated the market with the flexibility and scalability it offers. Many organizations, especially in healthcare and finance, have shifted towards cloud-based AI solutions due to lower operational costs and easy integration with existing IT infrastructure.

By Region: The market is segmented by region into North, South, East, and West. The central region, led due to its role as the administrative and financial capital of the country, as well as its leadership in smart city and AI innovation initiatives.

KSA Artificial Intelligence Market Competitive Landscape

Company Name

Establishment Year

Headquarters

IBM

1911

Armonk, NY, USA

Microsoft

1975

Redmond, WA, USA

Google

1998

Mountain View, CA

STC

1998

Riyadh, Saudi Arabia

SDAIA

2019

Riyadh, Saudi Arabia

IBM: In May 2024, IBM announced the release of open-source AI models, including the Granite family, aimed at assisting developers with faster code completion. Additionally, IBM partnered with the Saudi Data and Artificial Intelligence Authority (SDAIA) to train an Arabic-language AI model, ALLa M, using Watsonx, enhancing AI's understanding of multiple Arabic dialects.

Microsoft: In November 2023, Microsoft CEO Satya Nadella visited Saudi Arabia to emphasize AI's potential in transforming the Kingdom's economy. During his visit, Nadella highlighted Microsoft's partnerships with Saudi companies, including the deployment of AI solutions by King Faisal Hospital and Saudi Airlines. Notably, Saudi Airlines is leveraging Azure Open AI GPT-4 to develop an AI-powered travel assistant, a first in the region, expected to enhance personalized travel experiences.

KSA Artificial Intelligence Market Analysis

Market Growth Drivers

Increased AI Adoption in Healthcare: The Saudi healthcare sector is rapidly integrating AI technologies, particularly in diagnostics and patient care. AI diagnostic systems deployed in major hospitals across Riyadh, including King Faisal Specialist Hospital, are expected to manage over 3 million diagnostic cases by 2024, enhancing efficiency and reducing diagnostic errors.

Vision 2030 Initiative: Saudi Arabia's Vision 2030 aims to invest over $20 billion in artificial intelligence (AI) by 2030, with an expected economic impact of $135.2 billion specifically for the country. The AI sector is projected to grow annually by 20-34%, positioning Saudi Arabia as a leader in the Middle East's AI revolution.

AI in Financial Services: Saudi banks, including Saudi National Bank and Al Rajhi Bank, have invested in AI-driven fraud detection and customer service technologies. In 2024, AI-based systems will be managing approximately 30 million transactions annually, reducing operational risks and increasing customer satisfaction through personalized banking services.

Market Challenges

High Implementation Costs: AI technology implementation remains expensive, particularly for small and medium-sized enterprises (SMEs). In 2024, it is projected that more than 70% of SMEs in Saudi Arabia will struggle to afford the upfront costs of AI system deployment, slowing down market penetration outside of large corporations.

Data Privacy Concerns: With AI increasingly being used in sectors like healthcare and finance, concerns over data privacy are growing. In 2024, over 1.2 million individuals in Saudi Arabia expressed concerns over the security of their personal data, especially with AI-driven digital services collecting vast amounts of personal information.

Government Initiatives

SDAIA AI Strategy: The Saudi Data and Artificial Intelligence Authority (SDAIA) has launched a new initiative to promote ethical AI research and applications, developed in collaboration with UNESCO. This program aims to establish a framework for assessing AI ethics, targeting over 60 countries and fostering responsible AI practices aligned with national values.

Digital Transformation Program: The government initiative aims to allocate $3.3 billion in AI investments for public services in 2024, enhancing operational efficiency and citizen engagement. By automating routine tasks and implementing AI-driven health monitoring systems, the initiative is projected to improve service delivery and reduce waiting times, ultimately fostering greater public trust and satisfaction.

KSA Artificial Intelligence Market Future Outlook

The KSA AI market is expected to experience growth over the next five years, with increased AI adoption in smart city development, healthcare, and financial services, supported by ongoing government investments and strategic initiatives.

Future Market Trends

AI in Energy Optimization: Saudi Aramco and other energy companies will leverage AI to optimize oil production and distribution, ensuring more efficient resource management. By 2028, AI systems are expected to monitor and manage over 3,000 oil rigs and energy installations, reducing operational costs and improving environmental sustainability.

AI-Powered Financial Services: The Saudi financial sector will continue its AI-driven transformation, with banks deploying advanced machine learning models to enhance customer service and security. By 2028, AI-based fraud detection systems are expected to process over 100 million transactions annually, significantly improving risk management and customer trust.
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