Eram Holdings is spearheading Saudi Arabia’s push into advanced manufacturing, with plans to invest up to US$100 million over the next four years on power electronics and semiconductor integration to position the Kingdom as a regional leader in high-tech production.
It is also poised to enter battery-making with one of the world’s pioneers in that technology, Sarfraz Mohamed Paz, director of corporate development at Eram, shared with IFN Investor.
“We have successfully established the made-in-Saudi brand on manufacturing,” Sarfraz added. “We are exporting that now to the UAE, Kuwait, Qatar and other GCC markets, and looking at expanding elsewhere.”
Underpinning such expansion is the ‘B+’ and ‘BB+’ Saudi national credit rating, with a stable outlook, from S&P Global obtained by this private conglomerate with operations in 16 nations.
While exact funding and investment plans have yet to be finalized, Sarfraz said “whatever instruments we are taking from the bank, or any other institutions have to be bound by Shariah law principles”.
Among its potential financial channels is UK-based multifamily office services provider Lonmile, which supported Eram over the past 12 months during its transformative steps from a private company to a firm with a public credit rating.
Sarfraz explained that Eram was actively integrating cutting-edge chipmaking technology into its products, leading to more compact and energy-efficient industrial-grade equipment. “The moment you have advanced semiconductors as part of, let’s say, a circuit board, you are reducing the time for commissioning operations and maintenance, and power efficiency is highly increased.”
Founded in the 1990s, with over 40 Shariah-focused companies operating across nine business verticals, Eram’s push for technological advancement is intertwined with the Saudi Vision 2030 aim of boosting local content and diversifying the economy from oil.
Serving as a catalyst to Eram is Saudi Aramco’s ‘In-Kingdom Total Value Add’ (IKVTA) program that prioritizes home-grown enterprises when it comes to supply chain expansion at the state oil company.
Eram, which counts Aramco as a top client, has achieved the maximum 60% local score under IKVTA, becoming a preferred partner for many home-bred and foreign companies in Saudi Arabia, Sarfraz said.
“Every year, we are audited for our level of localization, and we have a negative audit, meaning the highest score.”
“Because of this, clients prefer to work with us, and the same pressure is there for the international manufacturers stepping into the Kingdom as IKVTA is classified into localized goods and services. It serves as a great enabler for local companies like us.”
R&D spending surges, battery partnership in the wings
Research and development spending at Eram, which employs more than 10,000 people, surged amid its twin focus on IKVTA and new semiconductor technologies aimed at sharpening the Saudi edge in manufacturing, Sarfraz said.
“We were the first ones in Saudi Arabia to set up an integrated power electronics manufacturing company, investing more than US$20 million,” Sarfraz said. “In the next three to four years, we’re expecting to easily commit another US$70-$100 million towards this.”
While Eram largely serves the energy sector now – with clients such as Aramco and engineering, procurement and construction companies involved in petrochemicals and utilities – it is venturing into battery-making next to advance Saudi Vision 2030.
“We are currently in discussions for the setting up of a production plant after finalizing a joint venture for a five-party logistics venture that will involve the Kingdom of Saudi Arabia and one of the world’s oldest manufacturers of nickel cadmium batteries,” Sarfraz said.
