President Donald Trump's administration has been working on a landmark deal to sell Nvidia chips to the United Arab Emirates — but a national security concern about China might blow the whole thing up before anything gets finalized, the Wall Street Journal reported on Wednesday.
Trump "championed the agreement during a Middle East trip in May, and the sides hoped to work out the details quickly ... Yet the countries haven’t been able to hash out the specifics to date, in part because some U.S. officials have expressed concerns that China could get access to the cutting-edge U.S. technology, people familiar with the talks said."
The dispute over this may be stuck "unless the U.A.E. agrees to different terms to address the U.S. officials’ national-security concerns," per the report.
A key sticking point is G42, an Emirati AI firm that would receive around 20 percent of the semiconductors from the deal, but that administration officials fear could end up allowing China access.
"Changing the agreement to no longer send chips directly to G42 could anger the Emiratis, who see the deal as vital to keeping pace in AI and saw G42’s involvement as a central part of the framework agreed to in May," said the report, noting that Trump's AI czar David Sacks, who helped craft the preliminary agreement, is urging all of this to be worked out and that the security concerns are "wildly blown out of proportion."
All of this comes as Trump has made a number of other moves that threaten to undermine American competitiveness in the semiconductor industry, including a 50 percent tariff on copper set to take effect at the start of August.
