US extends chip export restrictions to Middle East
The US Commerce Department has broadened its chip export restrictions, initially aimed at China and several other foreign adversaries, to now include a large portion of the Middle East. This expansion necessitates firms to secure a special US government license for exporting advanced semiconductors and chipmaking equipment to countries such as Saudi Arabia and the United Arab Emirates (UAE). The move comes as US officials conduct a national security review of AI development in the region.
US stalls chipmakers' AI accelerator exports amid security review
The US government has slowed down the approval process for special licenses required by chipmakers like NVIDIA and AMD to export large-scale AI accelerators to the Middle East. The delay is due to an ongoing national security review of AI development in the region. It remains unclear what constitutes a "large shipment" or how long this review will last. The move has affected attempts to sell these chips in UAE, Saudi Arabia, and Qatar.
Middle Eastern nations eye AI accelerators for data centers
AI accelerators, a category pioneered by NVIDIA, are essential for data centers processing vast amounts of information needed for developing artificial intelligence chatbots and other tools. These accelerators have become crucial equipment for companies and governments aiming to build an AI infrastructure. Countries like UAE and Saudi Arabia are particularly interested in importing massive quantities of these chips for their AI data centers.
US chipmakers' shares affected, strategy development underway
In recent weeks, US officials have either delayed or not responded to license applications submitted under this rule. Following Bloomberg's report on the license reviews, shares of NVIDIA slipped 3.8% to $1,105 while AMD pared earlier gains ending up less than 1% at $166.75. The aim of this slowdown is to allow Washington time to develop a comprehensive strategy around how these advanced chips will be deployed overseas.
US Commerce Department prioritizes national security
The Commerce Department stated that its highest priority was "protecting national security." A representative for the department said they conduct extensive due diligence through an interagency process when reviewing license applications from applicants intending to ship these advanced technologies globally. Thea Kendler, who leads export administration at the Commerce Department, visited UAE, Saudi Arabia, Qatar, and Kuwait earlier this month as part of ongoing discussions on semiconductor export controls.
US aims to prevent China's access to advanced chips
Concerns have been raised that Chinese companies could access these chips through data centers in the Middle East since they are largely cut off from cutting-edge American technology themselves. The Biden administration has been running a broader campaign aimed at keeping advanced semiconductors and manufacturing equipment out of China's hands over fears that this technology could bolster its military. Both UAE and Saudi Arabia are investing in AI as part of their efforts to reduce their economies' dependence on oil.
