Yes, that is correct. You have to remember that most of those talents only can play at low- or mid table clubs in smaller European leagues mostly. Europe is also a whole new culture and thing for them. Back in KSA they are treated as kings in their respective clubs, get much, much higher salaries, live in tax free societies, at home with family, friends etc.
Also what helps Iraq and Iran for instance and not KSA is that the two first countries have a somewhat large European diaspora. Meaning that they have thousands of Iraqis and Iranians who were born in European country x or y. So they get their footballing education in the best countries for that such as Netherlands, Sweden etc.
KSA does not have that since our immigrants were the Arabs who emigrated from Portugal to Oman and from Latin America to Indonesia etc., LOL, centuries ago and some recently to neighboring countries
Anyway the winner of Iraq-Japan will met KSA in the semifinals and Iraq already won against KSA 3-1 in the group stages.