(MENAFN- The Arabian Post)

The U. S. Department of Commerce has granted export licences for several billion dollars' worth of Nvidia chips destined for the United Arab Emirates under a bilateral AI agreement struck in May, paving the way for a high-stakes test of America's artificial intelligence diplomacy.

The licences were issued through the Commerce Department's Bureau of Industry and Security, marking the first concrete implementation of the Trump-era pact with the UAE. The deal envisaged the UAE importing hundreds of thousands of advanced AI chips annually in exchange for substantial investment commitments in U. S. infrastructure projects.

The approval follows months of delay and internal disagreements. Commerce Secretary Howard Lutnick had reportedly withheld authorisation until the UAE's promised investments in U. S. assets were finalised. That condition was viewed by some administration insiders as a national security safeguard, given the UAE's close ties with China. The delay has frustrated Nvidia's leadership, including CEO Jensen Huang, and alarmed parts of the White House keen to accelerate tech diplomacy.

One core point of contention has been the UAE's pledge to invest at least $1 billion in return for chip allocations-an investment that had not materialised until now. Lutnick is understood to have demanded proof of investment before signing off licences. Some officials saw this as necessary to prevent diversion of sensitive technology, others as excessive red tape.

Sources familiar with the negotiations say the chip exports will largely serve the UAE's AI ecosystem, including the G42 group, which has already established data-centre partnerships with U. S. cloud providers. The UAE's commitment to AI infrastructure has been ambitious: the May agreement was accompanied by plans for a 10-square-mile AI campus in Abu Dhabi to host large compute facilities.

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The authorised exports are seen as a precedent for U. S.“AI statecraft”-using advanced technology as an instrument of diplomacy and influence. The arrangement is expected to become a template for future U. S. deals with allied nations, especially in the Gulf region, aiming to shape tech ecosystems beyond borders.

Despite the approvals, challenges remain. The scope of the licences-how many of the more advanced chips like the H100 or H20 are permitted-is not publicly confirmed. U. S. authorities must still impose strict monitoring and end-use controls to prevent the transfer of capabilities to unintended users. Critics warn that inadequate safeguards could allow U. S. AI technology to aid China or other adversaries.

This transaction may reconfigure competition in the global AI landscape. The UAE, leveraging its capital and strategic location, could emerge as a regional hub for AI development and deployment-not just for the Gulf, but for Africa and South Asia. Its role as a bridge between U. S. tech and broader markets will depend on how tightly the U. S. enforces its technology controls.

For Nvidia, the licences unlock a new decade of export potential. The company has faced caps and restrictions on AI chip exports to many foreign markets under prior administrations. The success or failure of this UAE rollout will test its ability to balance commercial ambitions with compliance under escalating U. S. export scrutiny.

Analysts also eye ripple effects across U. S. policy toward China. Nvidia and AMD recently agreed to remit 15 percent of revenues from advanced chip exports to China to the U. S. government in exchange for licences-an unconventional arrangement that underscores how sensitive AI trade has become.

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