US approves some Nvidia UAE sales in step of Trump AI diplomacy

[HONG KONG] The US has approved several billion US dollars worth of Nvidia chip exports to the United Arab Emirates, an initial step in implementing a controversial deal that could serve as a blueprint for American artificial intelligence (AI) statecraft.

The Commerce Department’s Bureau of Industry and Security recently issued the Nvidia export licenses under the terms of a bilateral AI agreement hashed out in May, according to sources familiar with the matter, who requested anonymity so they could discuss a sensitive issue.

That approval came after the UAE made concrete plans for a reciprocal amount of investment on American soil, a US official said. The official declined to specify the exact value of the approved chip shipments and Emirati investment.

A representative for the UAE did not respond to a request for comment, while Nvidia declined to comment. “The Commerce Department is fully committed to the transformational US-UAE AI partnership deal,” a spokesperson said.

The licenses mark the first permits for Nvidia AI chip sales to the Gulf nation since US President Donald Trump took office. They are a tangible sign of progress on an agreement announced nearly five months ago, centred on a massive five-gigawatt data centre in the Gulf nation’s capital that counts OpenAI as an anchor tenant. That accord has been the source of significant consternation in Washington, where some officials in the Trump administration and on Capitol Hill have questioned the wisdom of building such a large site outside the US, especially in a place where Beijing has developed significant business and economic ties.

Securing the permits is a top priority for the UAE, where some officials have grown frustrated with what they see as a slow pace of US approvals. AI is among the top priorities for the Gulf nation, which is spending massively on infrastructure at home and overseas.

Underpinning the AI deal is an Emirati promise to invest a whopping US$1.4 trillion on American soil over the next ten years, a pledge the Gulf nation has not broken down into specific projects. The US, meanwhile, planned to approve up to 500,000 advanced American AI chips annually, with a fifth slated for Abu Dhabi AI juggernaut G42.

The initial batch of permits does not include any chips for G42, which is partnering with OpenAI on a campus in the UAE’s capital city, according to the sources. G42 did not respond to a request for comment.

It’s unclear when additional licenses may be issued, the sources said, adding that it will depend in part on how the UAE’s specific investment plans unfold. Under the accord, the oil-rich UAE will match in investment what it receives in chip shipments, on a dollar-for-dollar basis.

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The Persian Gulf has a major AI appetite and the money to back it, making the region among the world’s most important markets and financiers, for technology giants such as Nvidia and OpenAI. Gulf nations, including the UAE and Saudi Arabia, have been subject to US restrictions on advanced AI chip shipments since 2023, over concerns that the technology could be diverted to China, which is subject to more sweeping semiconductor controls.

Under president Joe Biden, US officials significantly slowed those license approvals, as they worked on a global framework that ultimately capped the volume of chip sales to many nations, including the UAE. Under that policy, which Trump’s team is not enforcing and has said that it will formally rescind, companies could bypass national limits in exchange for security commitments.

Biden’s team issued some licenses for chip shipments to the UAE towards the end of his term, sources familiar with the matter said. Also under his administration, G42 struck a partnership with Microsoft, based in large part on the Emirati firm’s promise to unravel ties with China’s Huawei Technologies.

Trump’s team, meanwhile, wants to go bigger. The Abu Dhabi data centre was one of a spate of AI announcements to emerge from Trump’s trip to the Middle East in May. Officials have said the strategy is about both winning significant investment in the US and ensuring that Chinese companies such as Huawei do not capture overseas customers in the AI race between the world’s two largest economies.

“President Trump’s policy boxes China out of the Middle East, whereas the previous administration’s policy forced these countries into China’s arms,” White House AI czar David Sacks said this week.

Huawei has tried to woo customers in the UAE, Bloomberg reported in July, though it had gained little traction at the time. The company was offering potential clients a few thousand of its Ascend 910B AI chips, a generation-old model, plus remote access to more advanced systems located in China.

While Sacks and others have argued that’s a reason for the US to move faster, some Trump officials saw the small size of Huawei’s pitch as evidence that the Chinese hardware giant has a limited capacity to compete.

Prior to Trump’s trip, the US plan at one point had been to approve up to around 100,000 advanced AI chips annually, sources familiar with the matter said. That later became up to 500,000 chips each year, an increase for which some officials feel the US did not get enough in return, particularly with regard to China-related issues. Some officials felt that the bilateral accord from May lacked sufficiently detailed security conditions for the chip shipments, headed to regions with close ties to Beijing.

Sacks previously said that the “vast majority” of advanced chips in the UAE “will be owned and operated by American cloud companies”, in line with the arrangement for G42 to get a fifth of the total shipments to the country.

But when local companies like G42 might secure those licenses, and under what conditions, remains an open question. Just a few weeks after Trump’s trip ended, Commerce Secretary Howard Lutnick told lawmakers that “we are going to allow our allies to buy AI chips, provided they are run by an approved American data centre operator, and the cloud that touches that data centre is an approved American operator”. BLOOMBERG