Its not so much that they need modernization, afterall they operate 220 F-16 of with 180 are c/d variants with at least 20 of those being blk 50/52. The bigger issue is that the US wont release AMRAAM to them. So those F-16s are all wvr. Beyond that they have 20 M2k needed to be replaced (they will get replaced by Rafale) and 70 F-7 to replace still. They were able to afford Rafale by selling Saudia Arabia their services in Yemen, but they are unlikely to ever get the AMRAAM, although with trump, you never know. In order to offset this and the unlikely senario of many more Rafale, they need something in bulk to handle BVR duty. IF EAF wants the thunder, it will be to replace F-7 and possibly A/B variants of the F-16. It will allow for 70-110 BVR capable aircraft thet dont otherwise have access to but they would likely need to be in blk 3 configuration.
This is all however a very big IF. Im not sold on JF-17 going to any arab air force, especially one that is so far in tge US sphere.