Dec 7 (Reuters) - The U.S. government has approved the

export of advanced artificial intelligence chips to a

Microsoft ( MSFT )-operated facility in the United Arab Emirates as part

of the company's highly-scrutinized partnership with Emirati AI

firm G42, Axios reported on Saturday, citing two people familiar

with the deal.

Microsoft ( MSFT ) invested $1.5 billion in G42 earlier this year,

giving the U.S. company a minority stake and a board seat. As

part of the deal, G42 would use Microsoft's ( MSFT ) cloud services to

run its AI applications.

The deal, however, was

scrutinized

after U.S. lawmakers raised concerns G42 could transfer

powerful U.S. AI technology to China. They asked for a U.S.

assessment of G42's ties to the Chinese Communist Party,

military and government before the Microsoft ( MSFT ) deal advances.

The U.S. Commerce Department, Microsoft ( MSFT ) and G42 did not

immediately respond to Reuters' requests for comment.

The approved export license requires Microsoft ( MSFT ) to

prevent access to its facility in the UAE by personnel who are

from nations under U.S. arms embargoes or who are on the U.S.

Bureau of Industry and Security's Entity List, the Axios report

said.

The restrictions cover people physically in China, the

Chinese government or personnel working for any organization

headquartered in China, the report added.

U.S. officials have said that AI systems could pose

national security

risks

, including by making it easier to engineer chemical,

biological and nuclear weapons. The Biden administration in

October required the makers of the largest AI systems to share

details about them with the U.S. government.

G42 earlier this year said it was actively working with

U.S. partners and the UAE's government to

comply

with AI development and deployment standards, amid concerns

about its ties to China.

Abu Dhabi sovereign wealth fund Mubadala Investment

Company, the UAE's ruling family and U.S. private equity firm

Silver Lake hold stakes in G42. The company's chairman, Sheikh

Tahnoon bin Zayed Al Nahyan, is the UAE's national security

advisor and the brother of the UAE's president.