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Deal faces opposition from some in U.S. government -

source

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Agreement would allow UAE's G42 AI firm many more chips

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Gulf region could become third AI power center globally

By Karen Freifeld, Hadeel Al Sayegh

NEW YORK/DUBAI, May 14 (Reuters) - The U.S. has a

preliminary agreement with the United Arab Emirates to allow it

to import 500,000 of Nvidia's ( NVDA ) most advanced AI chips

per year, starting in 2025, two sources familiar with the

situation said, boosting the Emirates' construction of data

centers vital to developing artificial intelligence models.

The sources, who spoke on condition of anonymity, said the

agreement was at least through 2027, but that there was a chance

it could be in place until 2030.

The draft deal called for 20% of the chips, or 100,000 of

them per year, to go to UAE's tech firm G42, while the rest

would be split among U.S. companies with massive AI operations

like Microsoft ( MSFT ) and Oracle that might also seek

to build data centers in the UAE, the sources said.

They said the agreement is still being negotiated and could

change before being finalized. One source said the deal,

elements of which were first reported by the New York Times,

faced growing opposition in the U.S. government over the past

day.

The Biden administration issued restrictions on AI chip

exports to control the flow of the sophisticated processors

worldwide, in part to keep the prized semiconductors from being

diverted to China, where they could bolster Beijing's military.

U.S. President Donald Trump this week is on a tour of the Gulf

region and on Tuesday announced $600 billion worth of

commitments from Saudi Arabia, including deals to buy large

quantities of chips from Nvidia ( NVDA ), Advanced Micro Devices ( AMD )

and Qualcomm ( QCOM ). Trump has made improving ties with some

Gulf countries a key goal of his administration.

The chips in the UAE deal that would go to G42 would represent a

tripling or quadrupling, in terms of compute power, that would

have been available to the UAE under rules put in place by the

administration of former President Joe Biden. The Trump

administration said last week it planned to rescind that

regulation.

At present, the vast majority of AI computing power is

deployed in the United States and China. If all the proposed

deals in Gulf states, and the UAE in particular, come together,

the region would become a third power center in global AI

competition.

The U.S. Commerce Department, which oversees export

controls, did not have a comment. The White House, G42 and the

United Arab Emirates did not have an immediate comment. Nvidia ( NVDA )

declined to comment.

Abu Dhabi sovereign wealth fund Mubadala, the UAE's ruling

family and U.S. private equity firm Silver Lake hold stakes in

G42. The tech holding group's chairman, Sheikh Tahnoon bin Zayed

Al Nahyan, is the UAE national security adviser and brother of

the Emirates' president.

The preliminary agreement also aims to promote data centers

in the U.S. It currently says that for every facility G42 builds

in the UAE, it must build a similar one in the U.S., the sources

said.

One of the sources said the definition of what is an

advanced AI chip would be figured out in a separate working

group that will be created later, along with security

requirements.

The proposed numbers of chips are for the most advanced graphics

processing units, one of the sources said. As of now, that could

refer to Nvidia Blackwell chips, which are more powerful than

the previous generation of Hopper chips, or Nvidia's ( NVDA ) forthcoming

Rubin chips, which are more powerful than both of their

predecessors.