The US has paused a major NVIDIA AI chip deal with the UAE due to fears the technology could reach China. Concerns center on UAE firm G42’s past China ties. While American tech firms push for progress, political and security risks could shift Gulf AI partnerships, with China stepping in as the US delays.
The United States has paused a big deal between the United Arab Emirates (UAE) and NVIDIA, a top American chipmaker. The deal involved hundreds of thousands of powerful AI chips. But now, the US is worried that this technology might end up in China.
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The concern is that the UAE has close links with Chinese companies. US officials believe there is a risk of these chips being passed on to China, either directly or through partnerships.
One UAE company called G42, which works with artificial intelligence (AI), was set to get about 20% of the chips. But this company has had ties to Chinese groups in the past, and that made US authorities very cautious. The US Department of Commerce now says it does not plan to let G42 get the chips.
Because of this, the whole deal is under review, and the original terms might be changed or delayed.
Despite the problem, some top US leaders still support the agreement.
Sachs even said that the security fears are “too much” and warned that the US should not lose its place in the AI race in the Gulf region.
Most of the AI chips were planned for use by American tech companies, including:
These companies are working on building large data centers in the UAE, which would become the largest AI campus outside the US. The chips would power advanced AI tools and models at these centers.
However, the export of such high-end chips needs approval from several US agencies. These checks are in place to prevent technology from falling into the wrong hands.
As the US delays the chip deal with the UAE, China sees an opportunity.
Chinese companies, especially Huawei, are trying to offer their own AI technology to countries in the Gulf. China wants to fill the gap if US companies pull back.
At the same time, Gulf countries like the UAE and Saudi Arabia are looking at AI as a key part of their future economy. They want to invest in AI, build smart cities, and lead in tech innovation. This makes them very eager to get AI chips and tools, no matter who provides them.
This blocked deal is one of the biggest AI-related deals of the year, and it shows how politics, security, and tech are deeply linked.
Some experts say:
Meanwhile, NVIDIA is also planning to restart sales of its H20 chips to China, due to recent rule changes.
US Commerce Secretary Howard Latnick said the chip sales to China are part of trade talks between the two countries. These talks focus on rare earth elements — important materials used in making chips, batteries, and other electronics.
China controls much of the world’s supply of these rare earth elements. That gives it strong leverage in tech trade. The US is trying to balance keeping security tight while not cutting itself off from key materials and markets.
The final decision about the NVIDIA-UAE chip deal is still up in the air.
