Over the course of a three-day trip to the Middle East, President Donald Trump and his emissaries from Silicon Valley have transformed the Persian Gulf from an artificial intelligence neophyte into an AI power broker.
They have reached an enormous deal with the United Arab Emirates to deliver hundreds of thousands of today’s most advanced chips from Nvidia annually to build one of the world’s largest data centre hubs, three people familiar with the talks said. The shipments would begin this year, with the vast majority of the chips going to US cloud service providers and about 100,000 of them to G42, an Emirati AI firm.
The administration revealed the agreement on Thursday in an announcement unveiling a new AI campus in Abu Dhabi, UAE, supported by 5 gigawatts of electrical power. It would be the largest such project outside the United States and help US companies serve customers in Africa, Europe and Asia, the administration said. The details about the chips weren’t disclosed and it’s not clear if they could still be subject to change.
As Trump traversed the region in recent days, the United States also struck multibillion-dollar agreements to sell advanced chips from Nvidia and AMD to Saudi Arabia. The United States and Saudi Arabia are also still in discussions on a larger contract for AI technology, five people familiar with the negotiations said.
The AI deals have caused people inside and outside the White House to wrestle with an unexpected question. Is the Trump administration, in its zeal to make deals in a region where Trump and his family have financial ties, outsourcing the industry of the future to the Middle East? The question speaks to divisions over AI policy that are rippling through the Trump administration. The deals were negotiated in the Middle East by David Sacks, the administration’s AI czar and Sriram Krishnan, its senior policy adviser for AI, who are both longtime venture capitalists. Leading figures in the AI industry, like Sam Altman of OpenAI and Jensen Huang of Nvidia, have also been involved in talks that have continued on the sidelines of the president’s trip in recent days.
These men believe that companies — and countries — succeed by creating a network of partnerships to support their interests. They are optimistic the deals will boost business for America’s AI companies and widen the nation’s lead in artificial intelligence.
“We want American AI to spread,” Krishnan said.
But as details of the deals have flowed back to Washington, they have been met with skepticism and alarm. The New York Times spoke with nine current and former US officials who expressed concern that the deals may have inadequate protections to prevent the technology from benefitting China and that they could mean that the world’s biggest data centres are in the Middle East at the end of the decade, instead of the United States.
The tensions capture some of the contradictions of Trump’s policies. The president has long criticised how US industries were moved offshore and in recent months, he has tried to bring them back by introducing steep tariffs. But in his first major diplomatic trip, he has shown a globalist’s interest in allowing America’s AI companies to thrive by going offshore.
The announcements of the two deals followed reports that $2 billion has flowed to Trump companies over the past month from the Middle East, including a Saudi-backed investment in Trump’s cryptocurrency and plans for a new presidential airplane from Qatar.
Klon Kitchen, a nonresident senior fellow at the American Enterprise Institute, said it was possible to respect the administration’s effort to ensure “American technologies are the rails on which all AI runs” while also worrying about the risk they may export AI development overseas, much as the United States did with the energy industry.
“In foreign policy, there are often no solutions, only trade-offs,” he said.
The United States has led the world in developing AI because its companies pioneered much of the technology. Countries around the world are now lining up to buy Nvidia chips and strike agreements with America’s AI providers. Few nations have clamored for chips more than the UAE and Saudi Arabia, which want to build AI industries to lessen their dependence on oil.
But the US government must approve these foreign chip sales. That’s because the United States wants to prevent that technology — which can also be used to coordinate militaries and develop autonomous weapons — from going to adversaries like China.
The Biden administration greenlit some chip sales to the UAE, but officials were reluctant to meet all of the country’s demands because they feared the sales might be significant enough to eventually help the UAE outstrip the United States in AI. They also questioned whether they should give such pivotal technology to an authoritarian government that has strong relations with China.
In 2024, Tahnoun bin Zayed al Nahyan, the chair of G42 and the national security adviser of the UAE, pitched a plan to the Biden administration that is similar to what the Trump administration has approved, a person familiar with the talks said. The proposal would have built a computing cluster requiring 5 gigawatts of electrical power in the UAE. But Biden officials rejected the plan because they thought it would send AI jobs overseas and outsource vital national security infrastructure.
But after Trump took office, his advisers worried that continuing to block sales to the Middle East could backfire, a senior administration official said. Huawei, China’s leading chipmaker, has been improving the performance of its AI chips, though it hasn’t yet exported any. But Trump officials worried that if the United States continued to limit the UAE’s access to US technology, the Persian Gulf nation would try Chinese alternatives.
“The president challenged us and tasked us; and said, ‘We have to win the AI race,’” Sacks said during a conference on Tuesday in Saudi Arabia. “We need our friends like the Kingdom of Saudi Arabia and other strategic partners and allies to want to build on our tech.” In negotiations, the Emiratis and Saudis pitched using US chips and AI models to help those US companies reach new customers across the region, two people familiar with the talks said. The governments said they would provide security guarantees on the chips, allowing the United States to account for their physical location and how they were used.
US officials also pressed the Emiratis and Saudis to balance big chip sales with investment in the United States, people familiar with the talks said. The Emiratis have agreed to a reciprocal investment requirement, in which every data centre built for a US company in the Middle East is offset by financial support for a data centre in the United States, these people said.
In a separate announcement on Thursday, the Trump administration said the governments would work together to make the process of Emirati investment in the United States “more efficient” and would establish a working group to monitor that.
The details of these agreements, or how they might evolve over time, remain unclear. It appears that G42 would still be subject to licensing agreements and other pending approvals to receive its chips.
Other AI experts are sympathetic to the view of some in the administration that the United States doesn’t have the energy resources to build all the data centres the world needs. The constraints have made it difficult for companies like OpenAI to fulfil customer demand, leading the company to limit a popular new feature to create animated images.
J J Kardwell, the CEO of Vultr, a data centre provider, said US companies had begun looking to build data centres abroad because the maximum amount of power available this year would be about 50 megawatts, enough to support about 25,000 of Nvidia’s newest AI chips. In contrast, the oil-rich Persian Gulf States have ample energy and the ability to quickly build data centres that support 100,000 chips or more.
“The US can’t be the data centre provider for the entire world,” Kardwell said.
But these views are not uniformly shared throughout the Trump administration, which is otherwise focused on an “America First” economic agenda of revving up energy production and bringing industries back onshore. Some officials have accused Sacks and Krishnan of freelancing around other advisers to negotiate details with Middle Eastern governments that others did not support.
One Trump administration official, who declined to be named because he was not authorised to speak publicly, said that with the G42 deal, American policymakers were making a choice that could mean the most powerful AI training facility in 2029 would be located in the UAE rather than the United States.
In the eyes of America First critics, each data centre built abroad represents another project not built in the United States. That means fewer jobs for electricians, pipe fitters and construction workers; and less tax revenue for local and state governments. It also means the US government would have less immediate influence over any economic or military gains from AI.
Jimmy Goodrich, senior adviser to Rand for tech analysis, said setting up AI data centres abroad was “taking the easy way out.” He understands why companies are frustrated with permitting and the lack of nuclear power, but he said the solution wasn’t to say, “Screw this. Let’s go to the Middle East.” Goodrich said the United States still had the best AI engineers, companies and chips; and should look for ways to speed up permitting and improve its energy grid to hold on to that expertise. Setting up some of the world’s largest data centres in the Middle East risks turning the Gulf States, or even China, into AI rivals, he said.
“We’ve seen this movie before and we should not repeat it,” Goodrich said.
Sam Winter-Levy, a fellow at the Carnegie Endowment for International Peace, said the huge chip sales did “not feel consistent with an America First approach to AI policy or industrial policy.” “Why would we want to offshore the infrastructure that will underpin the key industrial technology of the coming years?” he asked. — The New York Times
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