It represents a major reversal. Under President Joseph Biden, the US imposed strict export controls on semiconductors needed to power artificial intelligence, targeting not only China but also European, Asian, and Middle Eastern allies. The Trump administration is scrapping that approach and encouraging American AI companies to ship their most powerful tech abroad. 

The dramatic policy shift reflects the growing difficulties of enforcing a complex export control regime that often hurts friends as much as adversaries. US chip firms, led by NVIDIA, ​​suffered lost sales and argued that the restrictions were boomeranging, encouraging China to out-innovate the US and then ship competing AI products throughout the world. 

During US President Donald Trump’s recent Middle East tour, the US secured defense, aviation, and technology contracts with Saudi Arabia, Qatar, and the United Arab Emirates. The deals to sell cutting-edge chips to these authoritarian states provoked the most debate. Saudi Arabia’s sovereign wealth fund agreed to acquire “several hundred thousand” cutting-edge NVIDIA and AMD chips. G42, the UAE’s AI state champion, will lead a consortium of US firms in building the world’s largest AI data center cluster outside of the US. The campus will cover 10 square miles and boast a projected energy capacity of five gigawatts — enough to power 2.5 million of NVIDIA’s most advanced Blackwell chips. 

According to Trump administration officials, the chip sales represent a “win-win,” with China the big loser, ensuring that the Middle East, a key battleground in the US-China tech cold war, uses US — not Chinese — tech. The sales will “cement American technology as the global standard — before our competitors can catch up,” White House AI and Crypto Czar David Sacks argued. Sacks also touted the UAE deal’s “America First” elements: “a matching investment provision” that will fund “the build-out of AI infrastructure in the US at least as large and powerful as that in UAE” and the fact that “the vast majority of the compute will be owned & operated by American cloud companies.” 

In response to fears that the Gulf States will offer China access to restricted US tech, the Trump administration says the contracts include “robust US security standards.” The US National Security Council sees the goal of “making the United States a global leader in AI, while ensuring our most advanced technology does not fall into the hands of our adversaries” as “not mutually exclusive.” 

But the devil will be in the details — which remain sparse. The Biden administration begrudgingly permitted Microsoft to sell advanced AI tech to the UAE in 2024, but set stringent security requirements that included G42 cutting ties with Chinese tech firms and engineers. It is unclear whether the Trump administration will impose similar rules — or whether the UAE will follow them. And even if the security rules are imposed, the US agency responsible for enforcing them is understaffed, underfunded, and poorly equipped. 

The 2024 Microsoft-G42 deal inspired the Biden administration’s AI Diffusion Framework, a last-gasp effort to counter Chinese efforts to skirt US export controls. It restricted sales of the latest generation AI chips to democratic allies such as Estonia and Poland, not just China. Prior to President Trump’s Middle East tour, his administration announced it will scrap and replace the “Diffusion Rule,” a move hailed by NVIDIA. 

Yet critics argue that the Middle Eastern chip sales will boost regimes with a blatant disregard for democratic values and deepening economic, military, and technology ties with Russia and China. Senate Democrats lambasted the deals as putting the Gulf, not America, first by depriving “American AI developers of highly sought-after chips needed here and slow the US AI buildout.” Alongside a looming chip shortage, the US is struggling to supply enough energy to power its own expanding AI data centers. Should the Trump administration fail to “unleash American energy” and US AI hyperscalers become dependent on abundant Gulf energy to train their AI models, the chip deals risk granting the Saudis and Emiratis immense long-term leverage. 

Anxiety about China developing advanced AI models motivated the Biden White House’s export controls. The Trump administration shares Biden’s concerns about the prowess and popularity of Chinese AI. While the Trump team is reversing course on the Biden-era approach, it is ratcheting up export controls on China. 

The diverging paths of US export controls under Biden and Trump underscores a longstanding debate: is it better to protect advanced AI tech by restricting the world’s access to it, or encourage the diffusion of US models and chips to ensure American AI becomes the global standard? The Trump administration is betting on the second approach. 

It will take time to see whether the Gulf gamble will pay off. In the meantime, one thing looks certain — the Trump White House is ushering in a new era of high-stakes silicon statecraft. 

Matthew Eitel is Chief of Staff at the Center for European Policy Analysis. He writes regularly on export controls and US-EU-China dynamics. 

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

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