Middle East Second-Guesses US AI Chip Export Rules

The new rule proposed by the US government to control global access to its artificial intelligence chips has ignited widespread debate and has made the Middle East wary of future developments.

Tagged “Export Control Framework for Artificial Intelligence Diffusion,” this new rule would restrict exports of US-made AI chips in the hopes of curbing China’s military advancements using the technology.

However, the move has drawn sharp criticism from not just the Middle East, but also technology companies and industry groups concerned about its broader impact on innovation and global markets.

Countries in the Middle East, particularly the UAE and Saudi Arabia, have been aggressively investing in advanced AI capabilities. The UAE, through companies such as G42, has taken steps to secure advanced Nvidia H100 AI chips to develop its AI infrastructure. 

A regulated technology environment, as proposed by Talal Al Kaissi of G42 subsidiary Core42 in late 2024, would ensure compliance with US regulations while retaining technological sovereignty. This would include a framework for handling sensitive technology to address US concerns without an outright ban on AI chip exports.

Under existing regulations, deals for US-made AI chips are considered and approved case by case. In December the US approved the export of AI chips for a Microsoft-operated facility that will be used by G42. 

While both Middle East countries have made plans to manufacture their own chips, large AI developments in the region rely heavily on chips imported from US companies such as Nvidia.

The Information Technology Industry Council (ITI), representing companies such as Amazon, Microsoft and Meta, urged the Biden administration to reconsider the restrictions. 

In a letter to the US Commerce Secretary Gina Raimondo, ITI CEO Jason Oxman warned that the rule could place “arbitrary constraints” on American companies’ ability to sell computing systems overseas. 

“The potential risks to US global leadership in AI are real and should be taken seriously,” Oxman said.

The Semiconductor Industry Association and executives such as Oracle’s Ken Glueck have similarly criticised the draft rule, describing it as “one of the most destructive” regulations ever to affect the US tech industry.

While the US government’s intent is to address national security concerns, critics argue that the restrictions risk ceding the global AI chip market to competitors. Oxman’s letter emphasised that rushing such a “complex and consequential rule” could have “significant adverse consequences”.