The United Arab Emirates and United States have signed an AI agreement that sources had said would give the Gulf country expanded access to advanced artificial intelligence chips from the U.S. after previously facing restrictions over Washington's concerns that China could get its hands on the technology.
Such a long-coveted deal, finalised during U.S. President Donald Trump's visit to Abu Dhabi on Thursday, is a major win for the UAE, which has been trying to balance its relations with its longtime ally the U.S. and its largest trading partner China.
The UAE, a major oil producer, has been spending billions of dollars in a push to become a global AI player. But its ties to China had limited access to U.S. chips under former President Joe Biden.
The AI agreement "includes the UAE committing to invest in, build, or finance U.S. data centers that are at least as large and as powerful as those in the UAE," the White House said.
"The agreement also contains historic commitments by the UAE to further align their national security regulations with the United States, including strong protections to prevent the diversion of U.S.-origin technology."
Reuters had earlier reported that the two countries had finalised a technology framework agreement and that it would require commitments on both sides to the security of the technology.
The UAE could be allowed to import 500,000 of Nvidia's most advanced AI chips per year starting in 2025, sources have told Reuters.
The White House and Commerce Department statements made no mention of giving the UAE greater access to advanced chips. Nvidia declined to comment. The UAE foreign ministry did not immediately respond to a request for comment.
The U.S. pursued protectionist policies for years to curb China's access to advanced semiconductors, including ensuring the chips do not end up in the country via third parties.
Regulations are easing under Trump, whose AI czar David Sacks said in Riyadh on Tuesday that the Biden administration's export controls were "never intended to capture friends, allies, strategic partners".
Granting the UAE more access to the most advanced chips, manufactured by firms such as Nvidia (NVDA.O), marks a major turnaround.
"This shift enables (the UAE) to deepen its technology partnership with the U.S. while still preserving trade ties with China," said Mohammed Soliman, senior fellow at the Middle East Institute.
"It doesn't mean abandoning China but it does mean recalibrating tech strategy to align with U.S. standards and protocols where it matters most: compute, cloud, and chip supply chains," he said.
Tied to the deal was an agreement to build an AI campus in Abu Dhabi with 5 gigawatts of capacity for AI data centres, which will be the largest outside the United States, the U.S. Commerce Department said.
It will be built by Abu Dhabi state-backed firm G42 and operated in partnership with several U.S. companies, it added.
The vast bulk of AI computing power is currently deployed in the United States and China. The development helps the UAE in its stated ambition of becoming an AI power centre.
AI was top of the agenda when UAE President Sheikh Mohamed bin Zayed Al Nahyan visited Washington in December in the final days of Joe Biden's presidency. G42 and MGX, the state-linked vehicles picked to drive the UAE's AI investment push, have also invested in U.S. firms such as OpenAI and Elon Musk's xAI, while Microsoft last year agreed to invest $1.5 billion in G42.
The two companies said the deal was backed by security assurances, and under U.S. pressure, G42 had previously begun ripping out Chinese hardware it was using and sold off Chinese investments.
Still, major Chinese firms like Huawei and Alibaba Cloud are present in the UAE, and organised AI chip smuggling to China was tracked out of countries including Malaysia, Singapore and the UAE, a source told Reuters in February.
The Trump administration scrapped the Biden administration's export controls, adding that blanket restrictions may backfire by pushing allies and emerging markets towards Chinese suppliers. It has said a more open approach could boost innovation and U.S. strategic interests.
"Trump administration officials have consistently derided the Biden government's AI chip rules as excessively complicated," Russ Mould, investment director at AJ Bell, said.
The previous controls divided the world into three tiers - giving unlimited access to some countries, limited access to middle-tier ones such as Gulf states and blocking access to "countries of concern" including China and Russia.
"The plan seems to be to open up the middle tier, as evidenced by the president's tour to the Middle East," he said.
