Gil Luria from D.A. Davidson discusses the national security concerns around the report that U.S. officials are delaying a deal for the UAE's purchase of Nvidia AI chips.

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US officials are reportedly holding up an agreement that would allow the United Arab Emirates to purchase billions of dollars' worth of Nvidia's advanced AI chips. The delay is due to concerns that the technology could be transferred to China, which is seen as a national security risk by the US. 

The US is taking steps to maintain its lead in artificial intelligence by restricting the export of the most advanced chips to countries that might resell them to China. While the UAE has been moving away from Chinese technology and strengthening ties with US tech firms, the process of ensuring secure technology transfer is still being worked out. The situation highlights the ongoing competition between the US and China in AI and the complexities of international technology agreements.

Analyst: U.S.-UAE Nvidia deal delay is to prevent China from AI lead

Trump officials reportedly blocking an agreement that would allow the UAE to buy billions of dollars worth of Nvidia chips. A preliminary deal has been in the works since May when President Trump visited the Middle East. But sources telling The Wall Street Journal that both countries haven't been able to work out the mechanics of the deal due to concerns that China would get its hands on Nvidia's most advanced AI chips. They're also concerned about Huawei, which is reportedly trying to sell its chips in the Middle East as well. Officials from both the US and UAE reportedly discussed the deal in depth on the sidelines of the Tech and Energy Summit in Pittsburgh earlier this week. Let's get one take on what is unfolding here. Gil Luria is Managing Director at DA Davidson. He joins us live now. Gil, welcome to the program. Thanks for being here. What's your understanding of what the holdup is here, particularly after President Trump gave his approval to send these Nvidia chips to the UAE during his visit back in May? Yeah, the US at large is trying to prevent China from having the lead in AI. Currently, most of the fastest models are coming from the US, but there's a lot of Chinese labs that are catching up quickly. And had they had Nvidia's most advanced chips, they may actually be in the lead. So the US is moving along multiple fronts to make sure that it sustains the lead in AI in front of China because it sees it as a national security threat. So on one hand, it's trying to allow Chinese companies to buy degraded Nvidia chips. But on the other hand, it's taking several measures to prevent China from having the most advanced chips, not just in terms of a direct sales to China, but also sales to countries that are suspected to have forwarded or resold some of those chips to China. So that includes Singapore, Malaysia, Thailand. And from this news, it sounds like the US government is concerned about shipments of the most advanced chips to the Middle East arriving in China. These are solvable problems because you can start putting trackers in some of these most advanced servers. But until they're solved, this may be a little bit of a hitch in the ability to build these data centers in countries that the US is trying to restrict. Indeed, Gil, important to point out here that this is a Wall Street Journal report. CBC has not been able to independently verify this reporting. But of course, we're also looking into this story. And what we do know is the fact that these national security concerns are not necessarily new. In fact, the UAE has been actively pivoting away from Chinese tech for several years now. And the development of companies like G42, for example, has really been underpinned by the growth of US interests in this region. Let's also remember that the US and the UAE have a $10 trillion investment corridor, and technology is going to play a key role in that. So what is the actual concern here? Because as I say, this is not necessarily new. That's right. But the changes have been rapid. And the competition between the US and China is intense. Let's not forget that under the Biden administration, the restrictions around chips were very broad. There were 180 countries, including the UAE. It's very recent that the Trump administration excluded countries like the UAE from these restrictions. And so sometimes there's also a gap or a lag between when the administrative class reacts to the changes and when the political class made the changes. The political class made the changes. We're having less restrictions on those countries. The administrative class is still catching up. And part of it is putting in place the structure, the process, and the procedures to prevent any country from forwarding and reselling the chips into China. Again, this to me is a matter of time. And to your point, it's important to point out that it's important for the United States to be able to participate and be the foundation for the growth of AI in the Gulf, because if the US doesn't do that, the vacuum will be filled by China. So again, it's part of that competition. The direction the US is headed in is working in close cooperation with the Gulf states, especially the UAE, to develop data centers based on American technology. It just has to work out the process for doing so while reducing the risk that there'll be, again, even any amount of leakage of the top chips, the most advanced chips from any country, including the UAE, forwarded to China.

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Analyst: U.S.-UAE Nvidia deal delay is to prevent China from AI lead

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