- New Strategy& report warns that dependence on concentrated global chip, cloud and AI ecosystems creates economic and strategic risks for the region.
- Pragmatic AI sovereignty balances strategic control over critical AI capabilities, rather than attempting to own the entire AI value chain.
- Report sets out practical mechanisms to strengthen control, and maintain continuity under disruption, while helping the GCC capture more value from AI.
Dubai, UAE: The GCC’s rapid rise as a global AI leader has created a new strategic challenge for the region: how to protect access to the technologies, infrastructure and capabilities on which an estimated US$260 billion economic opportunity will depend by 2030.
A new report from Strategy& Middle East, part of the PwC network, outlines that the global AI value chain contains significant chokepoints, from advanced semiconductors and physical infrastructure to cloud platforms, frontier models and specialist talent. Heavy concentration among a relatively small number of global providers means countries that cannot secure continued access could face both economic and strategic risks.
But Strategy& argues the answer is not for GCC countries to attempt to own and operate the entire AI value chain themselves. Excessive localisation can create its own vulnerabilities, as witnessed during the 2026 Middle East conflicts, which saw disrupted cloud infrastructure in the UAE and Bahrain.
Instead, the report calls for “pragmatic AI sovereignty”: retaining strategic control over critical AI capabilities while ensuring continuity across the AI value chain, including during periods of disruption.
Chady Smayra, Partner, at Strategy& Middle East, said: “GCC countries have achieved remarkable progress in positioning themselves at the forefront of global AI adoption. As the region steps into its next phase of technological leadership, the goal is not to isolate or attempt to own every single component of the global AI supply chain, which would create internal fragility. Rather, it is to achieve pragmatic AI sovereignty: securing access where it matters, asserting control where it is critical, and building global leadership where the highest economic value can be captured.”
Beyond GPU nationalism
Much of the global debate around AI sovereignty has focused on access to advanced chips. Strategy& argues that this is too narrow. AI leadership depends on resilience access across five interconnected layers: semiconductors and hardware; physical infrastructure and connectivity; cloud platforms; models and intelligence; and AI systems and sector deployment.
These layers also depend on three cross-cutting enablers: talent and human capital, cybersecurity and digital resilience, and data sovereignty and privacy.
The report highlights the scale of these chokepoints: around 75% of global semiconductor manufacturing is concentrated in East Asia, while the three largest hyperscalers account for roughly 65% of the global cloud infrastructure market. Frontier model development is similarly concentrated among relatively few corporate labs, while access to specialist AI talent remains constrained by global competition.
Countries whose access to AI is disrupted at these chokepoints face more than a technology problem. The report identifies the potential for economic value to leak to external chip providers, hyperscalers, model developers and platform owners, alongside strategic risks created by external controls on chips, models and cloud services, jurisdictional exposure and changing rules and regulations.
A pragmatic model: Assure, Control, Partner, Influence
Rather than applying the same sovereignty model across every part of the AI ecosystem, Strategy& proposes four strategic postures that governments can apply according to the concentration, capital intensity, strategic sensitivity and value-creation potential of each layer.
- Assure: Secure access through agreements, allocations, diversification and contractual safeguards, particularly for globally concentrated capabilities such as advanced chips, critical hardware and frontier models.
- Control: Own, operate or govern capabilities where direct sovereign control is critical, including sensitive national data, digital identity, critical infrastructure and strategic national workloads.
- Partner: Work with global technology providers while maintaining local governance, localisation, resilience and clear exit rights, particularly across cloud platforms, foundation models and advanced AI services.
- Influence: Use capital, regulation, procurement and market access to shape standards, supplier priorities, technology roadmaps and policy discussions.
Turning the framework into action
The report also highlights practical concepts and implementation ideas that illustrate how GCC governments could translate pragmatic sovereignty into action:
- National AI Exchange: Aggregate national demand to procure AI infrastructure at scale and distribute access through a shared cloud platform, supporting government, startups, researchers and strategic sectors.
- National AI Assurance Labs: Establish dedicated national capabilities to test and validate AI models, systems and hardware before deployment in critical sectors
- National Model Escrow: Secure critical AI models under sovereign-governed escrow to ensure continued access if providers withdraw or terms change.
- Sovereign Data Embassy: Secure critical national data and systems in trusted partner countries to ensure continuity during disruptions.
From AI consumer to AI producer
The report argues that pragmatic sovereignty should do more than protect the GCC against disruption. It can also help the region capture more of the economic value created by AI.
At the AI systems and sector-deployment layer, GCC countries have an opportunity to move from being consumers of AI technology to producers of commercially viable solutions, managed services and sector platforms. Government and state-owned enterprise demand can be used to scale priority solutions, establish reference deployments, and turn proven domestic capabilities into exportable offerings.
The report identifies areas including government, energy, finance, health, logistics and defense where the region can develop sector-specific AI capabilities, while building local expertise in model adaptation, evaluation, Arabic-first development and other priority domains.
Ramzi Khoury, Partner, at Strategy& Middle East, concluded: “Achieving pragmatic sovereignty is an ongoing strategic discipline. Governments will need to set the rules and aggregate demand, sovereign wealth funds can secure access and wield influence, and national champions will need to build and operate critical capabilities. The GCC has the capital, geography and ambition to strengthen its own resilience, while shaping how AI ecosystems evolve across the region.”
