US sets new rule that could spur AI chip shipments to the Middle East

The US Commerce Department on Monday unveiled a rule that could ease shipments of artificial intelligence chips like those from Nvidia Corp to data centers in the Middle East. Since October 2023, US exporters have been required to obtain licenses before shipping advanced chips to parts of the Middle East and Central Asia.

Under the new rule, data centers will be able to apply for Validated End User status that will allow them to receive chips under a general authorization, rather than requiring their US suppliers to obtain individual licenses to ship to them. The United States will work with foreign data centers that apply for the Validated End User program as well as host governments to ensure the safety and security of the technology, a US official said.

Santa Clara, California-based Nvidia, the world's leading AI chip supplier, declined to comment.

The move comes amid growing concerns in Washington that the Middle East could become a conduit for China to obtain advanced American chips that are barred from being shipped directly to China.

G42, a UAE-based AI company with historic ties to China, has been a focus of those concerns. In April, Microsoft Corp. announced that it would invest $1.5 billion in the company, with plans to provide G42 with chips and model weights, sophisticated data that improves an AI model's ability to emulate human reasoning. The deal drew scrutiny from China hardliners in Congress , even though G42 said in February that it had divested from China and was accepting constraints imposed on it by the United States to work with American companies.

G42, which owns data centers, did not immediately respond to a request for comment.

Data centers that apply for the program will undergo a rigorous review process to make sure safeguards are in place to keep US technology from being diverted or used in ways contrary to national security, the Commerce Department said in a statement.

The vetting process include information about current and potential customers, business activities, access restrictions and cybersecurity, according to the rule. Applicants also must agree to reporting requirements and on-site reviews by US government representatives, and host countries may need to provide assurances regarding the safe and secure use of the technology, the rule says.

Authorisations will limit the quantities and types of technology that can be exported to a given data center, according to the official. The agency's Bureau of Industry and Security "is committed to facilitating international AI development while mitigating risks to US and global security," Commerce official Alan Estevez said in the statement.