Why is oil rich UAE investing in AMD?

The United Arab Emirates has a lot of things: oil, money, sand and now just over 8% of a major and arguably critical U.S. tech company, Advanced Micro Devices Inc.

But this investment does not make the UAE a tech powerhouse. The UAE is to tech what a grocery store is to food: it sells it, it doesn’t grow it. And in terms of tech size, it's more 7-Eleven than Safeway.

The UAE certainly knows what it’s buying with this $600 million-plus investment by the government-backed Mubadala Development Co. in the UAE capital of Abu Dhabi.

This is a relatively stable country that’s been focused on tech for sometime. It has special office parks for tech companies and tax free zone incentives. One example of this is Internet City in Dubai, part of the UAE. The UAE is a regional center for many major high-tech firms, including Microsoft, Oracle and Hewlett Packard. The AMD investment is giving the UAE a boost to its worldwide marketing.

UAE has also been trying to develop an offshore outsourcing industry. Its services industry is largely focused on customers in the Middle East and in Europe, but this country is almost never mentioned by offshore analysts. It's just too small.

It’s also training a workforce at UAE University College of Information Technology. The university recognizes the need to build a knowledge economy. It is working closely with tech vendors, such as Sun Microsystems which helped created a cyber security education and research center at the university.

[Here’s a factoid to give you some idea about how long UAE has been working in this direction. In 2000, ICANN, the domain name authority, took applications for new top level domains. The domain sought by Dubai: .go. ICANN didn’t approve it but this effort clearly showed some forward thinking. For more information see responses to ICANN’s questions.]

The UAE’s offshore development is severely limited by a small population. (The CIA Factbook puts it at 4.4 million.) It needs immigrants from India and elsewhere to supply its talent pool.

But I still think the UAE will be a country to watch. Someday, the Middle East will be stable and when its energy, money and intellectual capital can be turned in earnest to diversifying regional economies, the UAE may have in place all it needs meet the region’s technology needs. That may be the major reason why UAE is sending all this money AMD's way.

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