French defence and technology group Thales is pursuing opportunities in Saudi Arabia for a radar production factory, and in the UAE for an AI research centre, as Gulf nations seek a role in global supply chains.
Thales is seeking to expand a joint venture with Saudi Arabian Military Industries (SAMI) that was set up with the aim of localising defence production.
"We have an intention to grow this joint venture to work, not only on radars, but more generally speaking on air defence," Pascale Sourisse, senior executive vice-president of international development at Thales, told The National at the Paris Air Show.
"This joint venture should host the various activities we will have in Saudi Arabia … But I expect that there will be some work on communications systems."
The move comes as Saudi Arabia strives to develop its own military production capabilities to reduce reliance on foreign suppliers. The strategy is intended to diversify its economy from a reliance on oil, create more jobs for Saudis, attract highly-skilled workers, prioritise technical know-how transfers and become part of the global industrial supply chains.
Saudi Arabia was the largest military spender in the Middle East in 2024 and the seventh-biggest worldwide, according to an April report by the Stockholm International Peace Research Institute.
The kingdom recorded a modest military spending increase of 1.5 per cent, reaching an estimated $80.3 billion, but still 20 per cent lower than in 2015 when the country’s oil revenue peaked.
Ms Sourisse said it is "too early" to provide further details on the timeline and investment for a factory in Saudi Arabia.
Thales' proposed plan in the kingdom will include local manufacturing, engineering and maintenance support services, similar to its agreement with the UAE, she said.
The company's wholly owned unit Thales Emarat Technologies will invest in a factory to produce Ground Master series air surveillance radars in the UAE, as part of an agreement with Tawazun Council.
The factory, which is expected to be fully operational by 2027, will assemble, test and qualify advanced air surveillance radars for domestic use and export markets, Thales said in a statement in May during the 'Make it in the Emirates' event in Abu Dhabi.
The project is entirely funded by Thales, according to Ms Sourisse, who declined to provide the size of investment.
The agreement includes co-operation with UAE companies to become part of Thales' supply chain, she added.
AI research centre
Now Thales is in discussions with the UAE to open an AI research centre in Abu Dhabi, according to Ms Sourisse.
Thales' AI research centres, dubbed cortAIx, are currently set up in Singapore, France, Canada and Britain. This means the Abu Dhabi centre, if it goes ahead, will become the first of its kind in the Middle East.
"Considering the number of equipment that we have in the UAE that will embed AI, it makes sense to set up a cortAIx centre in the UAE," Ms Sourisse said.
While it is too early to firm up a timeline for establishing the centre, discussions are under way.
"We are working on it, it's not yet announced … it's a bit early to say, but that is the direction we're heading. We also need to agree with customers like the UAE Armed Forces on how they want to proceed."
The idea is to collaborate with military customers to work with them on use cases for AI applications in defence.
"It is not only about setting up an AI competence centre, it's really establishing a partnership with users to work on use cases … they can directly tell us that this kind of information that we can derive from data processing is the priority for them," Ms Sourisse said.
Asked if the conflicts in the Middle East are accelerating Thales' discussions with customers in the region, the veteran executive said: "We are expecting an increase in the level of orders that we get in very many countries, in the region certainly, but not only [there]."
"There's tensions in many areas of the world, so countries will continue to increase their investment in defence."
The capabilities that are in high demand include air surveillance, air defence, weapon systems, communications systems, drones either used in offensive or defensive ways and counter-drones, she added.
