TL;DR
- UAE’s multi-billion dollar deal for Nvidia AI chips has been paused
- U.S. officials fear the chips may be redirected to China
- UAE and Saudi Arabia had previously assured safeguards against smuggling
- Malaysia introduces export permits for U.S. AI chips amid rising concerns
- Deal highlights growing U.S. scrutiny on AI chip exports globally
U.S. National Security Puts Nvidia-UAE AI Deal on Hold
The United Arab Emirates’ attempt to secure a large-scale AI chip deal with American firms has reportedly hit a significant roadblock. According to The Wall Street Journal, the proposed purchase — worth billions — is now on hold due to rising national security concerns within the United States.
The deal involved purchasing cutting-edge AI chips from industry leaders such as Nvidia and others, intended to fuel the UAE’s growing ambitions in artificial intelligence. However, U.S. policymakers are reportedly concerned that the exported technology could be redirected to unauthorized nations — specifically China.
UAE and Saudi Assurances Not Enough
According to insiders quoted by The Wall Street Journal, chip smuggling was already a known risk when the agreement was drafted. The UAE and its regional partner Saudi Arabia offered written assurances that appropriate safeguards were in place to prevent diversion.
But recent developments have heightened scrutiny. Malaysia, for instance, just enacted export permit requirements for all U.S.-origin AI chips, a move that aligns with growing U.S. concern over indirect exports to China.
Broader Export Restrictions May Follow
The Biden administration is considering extending similar measures to Thailand and Malaysia, both of which have growing chip handling and logistics infrastructures that could serve as diversion points. As Washington tightens export policies, even U.S.-friendly nations may be subject to restrictions.
This shift builds on earlier moves by the Trump administration and has continued into current policy as the U.S. government seeks to protect its technological edge in AI, semiconductors, and advanced computing.
AI Chip Export Controls by Country
| Country | Recent Regulation or Status | Source |
| UAE | Deal with Nvidia on hold pending U.S. review | WSJ |
| Malaysia | Requires export permit for U.S. AI chips | Bloomberg |
| Thailand | May face new U.S. chip export restrictions | Reuters |
| China | Primary target of export control measures | CNBC |
Strategic Stakes for the U.S. and the Gulf
The UAE has been a key partner in U.S. regional strategy and has invested heavily in becoming a global AI hub, but Washington’s tech diplomacy is increasingly framed around its rivalry with China. The halting of this deal suggests trust alone is no longer sufficient when it comes to sensitive technology transfers.
Should this deal be terminated outright, it may set a precedent for future AI-related transactions involving Middle Eastern partners and other nations close to Chinese influence.
