U.S. Rewards U.A.E. with Coveted AI Chips After Iran War
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It's Wednesday, July 15th. I'm Daniel Bach for The Wall Street Journal, filling in for Luke Vargas. And here is the AM edition of What's News, the top headlines and business stories moving your world today. The U.S. has given the United Arab Emirates expanded access to highly coveted artificial intelligence chips as a reward for its help with the war against Iran. The UAE has carried out dozens of airstrikes against Iran, intercepted hundreds of missiles in the Gulf, and helped to keep oil moving through the Strait of Hormuz. Journal finance reporter Elliot Brown writes that the move caps a years-long push by the Gulf state to obtain American technology to diversify its economy. Elliot, first of all, what's in this agreement?
What this agreement does is it moves the UAE from a bucket of countries that includes Yemen and China and into a bucket that includes Europe and South Korea. And it allows them to purchase unlimited chips or as many as the market will bear for AI, at least for its flagship AI company, G42, and for any American hyperscalers that are building data centers in the country.
And what is the hope for how this will change their economy? Previously, the UAE had been treated the same as China. Now it's quite elevated in its access to this technology. What is the hope for the Gulf nation?
Yeah, the UAE in particular has really made a big part of their strategy to be ahead on AI. They want to become a huge data center hub. And so they're right now building a giant data center outside of Abu Dhabi. They want to build five gigawatts worth, which is, you know, the equivalent power of two and a half Hoover dams. And so this would be one of the biggest concentrations of data centers for AI in the world. And they just sort of see that as critical to becoming a world leader in AI, which is their goal.
And what about the timing here? You write that this came after a lengthy lobbying effort.
Yeah, this has been a huge priority for the leadership in Abu Dhabi, particularly Sheikh Taqnoon bin Zayed, who's the brother of the president and the national security advisor. He's been pushing since the Biden administration, making lots of trips to Washington to unshackle the UAE and let it buy tens of billions of dollars of chips. And so they finally had success here after some smaller successes with both presidents because of their help with the Iran war. And so the way the Commerce Department is casting this in the U.S. is that this is a reward for its help with Operation Epic Fury. Another thing is the UAE has really stood out in other ways as embracing the Trump administration's policies.
In the first term, they signed the Abraham Accords and were sort of the main power there, which established relations and trading between some of the Gulf states and Israel.
Some people may say it's a reward for Sheikh Taknoon's business dealings with the president. However, we should probably draw the line between him and G42, which you've done so well in your past reporting.
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