Why US-Middle East AI Chip Deals Ignite Security Debate
Sign up for ARPU: Stay ahead of the curve on tech business trends.
President Donald Trump’s recent tour of the Middle East resulted in a flurry of agreements to provide advanced artificial intelligence chips from companies like Nvidia Corp. and Advanced Micro Devices Inc. to entities in Saudi Arabia and the United Arab Emirates. These deals, involving hundreds of thousands to over a million coveted AI accelerators, aim to solidify US partnerships and secure markets for American tech. Yet, they have simultaneously opened a rift within the Trump administration, highlighting a fundamental tension in the geopolitics of AI: how to balance the strategic imperative of maintaining a technological lead and preventing chips from reaching rivals, primarily China, with the economic and diplomatic benefits of selling and deploying US technology globally.
What are these AI chip deals in the Gulf?
As part of agreements announced during President Trump’s visit, entities in Saudi Arabia and the UAE are set to acquire significant quantities of advanced AI chips. Saudi Arabia’s state-run investment firm’s new company, Humain, is slated to receive “several hundred thousand” advanced processors from Nvidia over five years, including early access to cutting-edge GB300 Grace Blackwell products and associated networking technology, and partners with companies like Cisco and Amazon on AI initiatives. In the UAE, discussions involve potentially importing over a million advanced Nvidia accelerators (like H100 equivalents) over several years, primarily for projects involving or owned by US companies, including plans for a colossal 5-gigawatt data center with Abu Dhabi-based AI firm G42 and US partners like Microsoft.
Why are Gulf countries seeking these advanced chips?
Like many nations worldwide, Saudi Arabia and the UAE view artificial intelligence as critical for future economic competitiveness, national security, and diversifying economies away from fossil fuels. Building “sovereign AI” capabilities — domestic infrastructure capable of cutting-edge AI work — has become a national priority. This requires access to the most powerful and efficient AI hardware available, which currently means high-end chips from companies like Nvidia and AMD. The immense capital required for these data centers and the associated compute power is substantial, but the Gulf states have the financial resources and willingness to invest rapidly, making them key players in the global scramble for AI compute capacity and a lucrative market for chip providers.
Why does providing these chips to the Gulf cause debate within the US?
The core of the debate lies in balancing competing US interests. Proponents, like White House AI Adviser David Sacks, argue that facilitating these deals prevents countries like Saudi Arabia and the UAE from eventually turning to Chinese alternatives, such as Huawei’s growing portfolio of AI chips. By basing global AI infrastructure on US technology, the US maintains influence and builds strategic partnerships. They contend that this aggressive proliferation, when paired with security provisions, is essential for maintaining overall American leadership in AI.
However, “China hawks” within the administration raise significant national security concerns. They worry that despite agreements, chips could potentially be diverted to China given its deep ties in the region. Past associations of entities like G42 (an Abu Dhabi-based AI firm) with Huawei are also a point of concern. These officials argue that legally binding safeguards are insufficient and that shipping such large quantities of advanced chips outside the US, even to partners, risks diluting the US’s domestic concentration of AI compute power and could pose risks if political alliances shift in the future.
How do US export controls factor into this?
The debate is happening as the US government is actively reshaping its approach to semiconductor export controls. President Biden’s “AI diffusion rule,” which established tiers of access for different countries based on risk, was recently rescinded by the Trump administration. A new framework is being drafted, providing a crucial opportunity to address the concerns raised by the Gulf deals. All shipments of advanced AI chips still require US government licenses, involving review by multiple agencies. China hawks are pushing to use this regulatory process to slow the deals or embed stricter guardrails, particularly regarding chip diversion to China or the use of US chips with Chinese AI models or hardware. The US Commerce Department also recently issued a warning that using Huawei’s Ascend AI chips “anywhere in the world violates US export controls,” underscoring the broader strategy to limit China’s AI advancement and push allies away from Chinese technology.
Is access to manufacturing technology also a concern?
Beyond the chips themselves, access to advanced semiconductor manufacturing capabilities is another geopolitical battleground. The UAE has reportedly expressed interest in hosting a fabrication plant from TSMC, the world leader in advanced foundry technology, and sought US support for this ambition. US China hawks view a potential TSMC fab in the UAE as highly dangerous, arguing it would create unnecessary national security risks by proliferating cutting-edge manufacturing capability outside of tightly controlled regions and closer to potential adversaries, especially considering regional ties. This highlights how the control over foundational manufacturing (like TSMC’s processes, which depend on ASML’s equipment) is as strategically sensitive as the chips themselves, and its location is a key point of negotiation in global tech alliances.
What’s at stake for US technology companies and global AI leadership?
For US technology companies, these deals represent significant economic opportunities, potentially worth billions in chip sales and data center construction. They allow companies like NVIDIA, AMD, OpenAI, Microsoft, and Cisco to expand their markets beyond the handful of large US hyperscalers and diversify their customer base globally. Advocates argue that this expansion is crucial for maintaining the financial strength needed to continue innovating and keep the US at the forefront of AI. However, the debate underscores the inherent tension: maximizing commercial reach versus minimizing national security risks. The outcome of this internal US debate, and the specifics of the final export control rules, will significantly shape the global AI hardware landscape, influencing where advanced computing power is concentrated and who provides the foundational technology for the AI era.
Reference Shelf:
Alasdair Phillips-Robins
Guardian staff and agencies