Saudi Arabia is primed to become a hotspot for artificial intelligence infrastructure thanks to its surplus in energy, according to Groq CEO Jonathan Ross.

The Middle Eastern country is known for its vast energy resources and that’s leading major technology firms to announce infrastructure deals in the region. It is also part of the kingdom’s Vision 2030 strategy, which is a plan to diversify the Saudi Arabian economy beyond oil.

Jonathan Ross, the co-founder and CEO of AI chip company Groq, told CNBC’s Dan Murphy in an interview at the Future Investment Initiative (FII) conference in Riyadh, that Saudi Arabia can become a net exporter of data thanks to its surplus in energy.

“One of the things that’s hard to export is energy. You have to move it, it’s physical, it costs money. Electricity, transporting it over transmission lines is very expensive,” he said.

Data, in comparison, “is very cheap to move,” Ross, who previously worked on AI chips at Google’s parent company Alphabet, added. “So since there’s plenty of excess energy in the Kingdom, the idea is move the data here, put the compute here, do the computation for AI here, and send the results.”

“What you don’t want to do is build a data center right next to people, where it’s expensive for the land, or where the energy is already being used. You want to build it where there isn’t, where there aren’t too many people, where the energy is underutilized. And that’s the Middle East, so this is the ideal place to build out.”

The Middle East could see $320 billion worth of gains thanks to AI, according to PwC, and Saudi Arabia is looking to capitalize on that by putting AI at the heart of its economic strategy.

The CEO of the state-backed AI and data center company Humain, which is also working with Groq, previously told CNBC that it’s ambition is to become the “third-largest AI provider in the world, behind the United States and China.”

Saudi Arabia faces stiff competition competition, however, with the United Arab Emirates leading the region’s progress thus far. PwC expects AI to contribute $96 billion to the UAE economy by 2030, or 13.6% of GDP, while Saudi Arabia could see $135.2 billion, or 12.4% of GDP, from AI over the same time frame. If those figures come to fruition, it would put Saudi Arabia in fourth place, behind its neighbor, on the global AI leaderboard.

However, data centers run hot and typically need a lot of water for cooling, which poses critical questions around the suitability of an arid and hot country like Saudi Arabia housing such infrastructure. It has also long experienced a digital skills shortage and AI talent will likely be no exception, though the government has championed the upskilling of citizens.

Those challenges haven’t yet slowed down the slew of AI-related announcements. Groq is working with Aramco Digital, the digital and technology arm of Saudi Aramco, to build what it has dubbed the “world’s largest inferencing data center.”

Its chips, made in upstate New York, per Ross, are specifically designed for putting AI to use, which is known as inference.

Earlier this year, the California-based technology company secured $1.5 billion in investment from Saudi Arabia to its expand its efforts. It is also supporting the development of the Saudi Data and AI Authority’s own large language model.

“It’s optimized for interfacing with the kingdom, so if you need to be able to ask about something here, it has all the data that you need to get the appropriate answers. Whereas other LLMs haven’t been tuned, they don’t have access to a database that’s as rich with information about the local region,” Ross said.

Localized data is a hot topic as countries around the world look to make use of AI but may not receive relevant results from models trained on English-language data sets from industrialized countries.

Shares of several U.S.-listed rare earth miners fell on Monday as U.S. officials said they expect China to delay introducing export controls on critical minerals as part of a broader trade deal.

Critical Metals fell more than 10% in premarket trade, USA Rare Earth declined 8.6%, MP Materials was down 5.7% and Trilogy Metals lost 8%. Energy Fuels and NioCorp Developments, meanwhile, traded 4% and 6% lower, respectively.

U.S. Treasury Secretary Scott Bessent told NBC News’ “Meet The Press” on Sunday that Washington and Beijing were expected to reach a deal to avoid a new 100% U.S. tariff on Chinese goods, with Beijing set to defer on imposing strict rare earth export controls.

His comments come ahead of a high-stakes meeting between Chinese leader Xi Jinping and U.S. President Donald Trump on Thursday.

Trump on Monday said that the U.S. and China were set to “come away with” a trade deal. Speaking aboard Air Force One en route to Japan amid a weeklong Asia trip, Trump said that he had “a lot of respect for President Xi.”

The U.S. president had previously threatened to impose new tariffs of 100% on imports from China starting from Nov. 1, adding at the time that the White House would also slap export controls on “any and all critical software.”

China, for its part, announced a new framework earlier this month for restricting rare earth exports. The move was seen as a stark warning to the West — and a reflection of the deepening mistrust between Beijing and Washington.

To be sure, China is the undisputed leader of the critical minerals supply chain, producing nearly 70% of the world’s supply of rare earths from mines and processing almost 90%, which means it is importing these materials from other countries and refining them.

“Details are still limited, and nothing will be finalized until the Trump-Xi meeting,” Wolfe Research analyst Tobin Marcus told clients in an Oct. 26 note.

“But a renewed truce now seems near-certain, with China likely fully delaying their rare earth export controls for a year—better than the alternative of an agreement to grant licenses,” Marcus said.

— CNBC’s Michael Bloom contributed to this report.