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UAE positioning itself as a global AI player

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Trump administration scraps Biden chip export rules

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UAE balances strategic US ally with trading partner China

(Recasts story after deal announcement)

By Federico Maccioni, Manya Saini and Yousef Saba

DUBAI, May 15 (Reuters) - 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 ( NVDA ) 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 ( NVDA ) 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 ), 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 ( MSFT ) 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.