Trump Administration Approves Nvidia AI Chip Exports to UAE in Major Tech-Diplomacy Deal

Nvidia shares climbed 1.8% to a record high in US trading following the news.

The United States has authorized several billion dollars worth of Nvidia Corp. chip exports to American companies including Oracle Corp. for projects in the United Arab Emirates. This marks an initial implementation phase of a significant bilateral deal that could establish a precedent for President Donald Trump's approach to AI diplomacy.

According to sources familiar with the matter who requested anonymity due to the sensitive nature of the information, the Commerce Department's Bureau of Industry and Security recently issued these export licenses under terms established in a May bilateral AI agreement.

The approved shipments specifically target American companies operating facilities in the UAE, including Oracle, though the sources did not disclose all customers. Notably, permits were not issued for shipments to local UAE entities like Abu Dhabi's AI powerhouse G42.

A US official stated that these licenses were approved after the UAE presented concrete plans for reciprocal investments in the United States. The official did not specify the exact value of either the approved chip shipments or the corresponding Emirati investment.

The news propelled Nvidia shares up by 1.8% to an all-time high in US trading.

When contacted, representatives for the UAE and G42 did not respond to comment requests, while Nvidia declined to comment. A Commerce Department spokesperson affirmed, "The Commerce Department is fully committed to the transformational US-UAE AI partnership deal." Oracle did not immediately respond when asked for comment.

These licenses represent the first permits for Nvidia AI chip sales to the Gulf nation since Trump took office. They demonstrate tangible progress on an agreement announced nearly five months ago, centered around a massive 5-gigawatt data center in Abu Dhabi with OpenAI as an anchor tenant. Other participants in this project include Oracle, Cisco Systems Inc., Japan's SoftBank Group Corp. and G42.

The UAE agreement has generated considerable debate in Washington, where some Trump administration officials and members of Congress have questioned the wisdom of constructing such an extensive facility outside the United States, particularly in a location with substantial economic ties to Beijing. Similar concerns have been raised regarding AI partnerships in Saudi Arabia announced during Trump's regional tour in May.

Securing these permits is a priority for the UAE, where officials have expressed frustration with what they perceive as slow US approval processes. The Gulf nation is making enormous investments in AI infrastructure both domestically and internationally.

The AI deal is underpinned by an Emirati commitment to invest approximately $1.4 trillion in the United States over the next decade, though specific projects within this pledge remain undefined. For its part, the US planned to approve up to 500,000 advanced American AI chips annually, with one-fifth allocated for G42.

Sources indicate that the timeline for additional license approvals remains uncertain and will partially depend on the progression of the UAE's specific investment plans. Under the agreement, the oil-rich UAE will match its chip shipment receipts with dollar-for-dollar investments in the US.

The Persian Gulf region demonstrates significant appetite for AI technologies and possesses the financial resources to support it, making it one of the world's most important markets and sources of funding for technology giants like Nvidia and OpenAI. Since 2023, Gulf nations including the UAE and Saudi Arabia have faced US restrictions on advanced AI chip shipments due to concerns about potential technology diversion to China, which faces more comprehensive semiconductor controls.

During President Joe Biden's administration, US officials significantly reduced license approvals while developing a global framework that ultimately capped chip sales to various nations including the UAE. Under that policy, which Trump's team has indicated it will formally rescind, companies could exceed national limits in exchange for security commitments.

Biden's administration issued some licenses for UAE chip shipments toward the end of his term, according to sources familiar with the matter. During this period, G42 also formed a partnership with Microsoft Corp., largely based on the Emirati firm's commitment to sever ties with China's Huawei Technologies Co.

The Trump administration is pursuing more ambitious goals. The Abu Dhabi data center was among several AI initiatives announced during Trump's Middle East visit in May. Officials have stated this strategy aims to secure significant US investment while ensuring Chinese companies like Huawei don't capture overseas customers in the AI competition between the world's two largest economies.

"President Trump's policy boxes China out of the Middle East whereas the previous administration's policy forced these countries into China's arms," stated White House AI czar David Sacks this week.

Huawei has attempted to attract customers in the UAE, as Bloomberg reported in July, though with limited success at that time. The company offered potential clients several thousand of its Ascend 910B AI chips, a generation-old model, plus remote access to more advanced systems located in China.

While Sacks and others argue this situation necessitates faster US action, some Trump officials viewed Huawei's limited offering as evidence of the Chinese hardware giant's constrained competitive capacity.

Prior to Trump's trip, US plans initially considered approving up to approximately 100,000 advanced AI chips annually, according to sources familiar with the discussions. This figure was later increased to up to 500,000 chips yearly—an expansion that some officials believe did not secure adequate concessions in return, particularly regarding China-related concerns. These officials felt the May bilateral accord lacked sufficiently detailed security conditions for chip shipments to a region with close Beijing ties.

Sacks previously stated that the "vast majority" of advanced chips in the UAE "will be owned and operated by American cloud companies"—aligning with the arrangement for G42 to receive one-fifth of total shipments to the country.

However, when local companies like G42 might secure licenses, and under what conditions, remains uncertain. Shortly after Trump's trip concluded, Commerce Secretary Howard Lutnick told lawmakers, "We are going to allow our allies to buy AI chips, provided they're run by an approved American data center operator, and the cloud that touches that data center is an approved American operator."