By Eric Vandenbroeck and co-workers

America and the Gulf Must Work Together on Artificial Intelligence

When U.S. President Donald Trump visited the Arab Gulf in May, his focus was not on Gaza, Iran, or even normalization between Israel and Saudi Arabia. Instead, it was on business deals and, above all, artificial intelligence. During the trip, Trump agreed to sell advanced U.S. chips to Saudi Arabia and the United Arab Emirates and to invest in AI mega-campuses in the Gulf that will host U.S. firms. One such site, in Abu Dhabi, could become the worldʼs largest concentrated cluster of the computing power fueling artificial intelligence. The Gulf countries, in turn, promised to invest tens of billions of dollars in AI on U.S. soil. And last month, during his trip to Washington, Saudi Crown Prince Mohammed bin Salman (also known as MBS) won final approval to import tens of thousands of advanced U.S. semiconductors, which had been promised to Saudi Arabia earlier in the year.

Armed with chips, sovereign wealth, and abundant energy, Gulf states could surpass Europe and India in terms of AI infrastructure—eventually becoming the world’s third biggest hub for AI computing power, behind the United States and China. Computing power has now taken its place alongside crude oil as a pillar of the U.S.-Gulf relationship, and the Gulf states have become a partner of first resort for the Trump administration.

The upside of this AI cooperation is significant. If done right, the deals will channel the vast wealth of Gulf states into American AI companies and allow these firms to expand to areas with few power and permitting bottlenecks. With the Gulf’s connectivity to surrounding regions, the reach of the United States’ AI stack—that is, the layers of hardware and software that AI is built on—could extend to billions of users across Africa, Central Asia, and the Middle East. The deals could also enable the United States to dislodge China as the Gulf’s top technology partner, which would be a big win for Washington over Beijing.

But exporting advanced U.S. technology comes with risks. It could fall into the wrong hands, for example, or undercut the domestic operations of American AI companies. The devil is thus in the details. The Trump team announced these deals before finalizing their terms and badly needs to get the fine print right. Washington must, in particular, ask these countries to commit to stringent safeguards in exchange for transformative U.S. inventions, and it must be prepared to enforce the terms of any eventual agreement.

 

A Chip Hawk’s Nightmare

Nearly a decade ago, long before ChatGPT burst into the public’s consciousness, young, tech-savvy leaders in Abu Dhabi and Riyadh made a bet that AI could help Gulf economies diversify away from oil. In 2017, the UAE created the worldʼs first AI ministry, and in 2018, it launched a state-backed AI firm called G42. The country was an early adopter of AI in its government services, opened an AI-focused university, developed Arabic-language AI models, and launched a massive AI-focused investment fund. According to a report published in November by Microsoft, the UAE now has the highest rate of AI adoption of any country, as measured by the share of the working-age population that uses AI each month. Meanwhile, in 2016, Saudi Arabia began investing billions in U.S. tech firms, such as Uber, and integrating AI into Saudi Arabia’s flagship ventures, including its top research university and national oil company.

This outreach, however, ran into trouble. After the 2018 killing of Jamal Khashoggi by Saudi security services, some Silicon Valley firms hesitated to work with Gulf governments. China, in turn, swept in, offering affordable, bundled 5G and cloud services to the region’s businesses, often powered by Huawei chips. Chinese AI, it seemed, would dominate the Gulf.

But in late 2022, the success of ChatGPT demonstrated to the world that the United States was at the forefront of AI, again making it the most attractive partner. And in 2023, Washington put new conditions on its exports of advanced chips. Any country that wanted to buy them would have to distance itself from U.S.-sanctioned Chinese entities, including Huawei. The Gulf got the message. G42, once deeply intertwined with Chinese companies, began to rip out and replace its Huawei hardware.

Trumpʼs Gulf AI deals have reignited a long-simmering debate in Washington over how to maintain the United States’ technological edge. The chip hawks argue for limiting semiconductor exports to just close allies and U.S. firms abroad to prevent sensitive technology from leaking to U.S. adversaries. They oppose selling advanced chips to the Gulf because of the regionʼs technological and military ties to China. According to chip hawks, the United States can be selective with its exports because China can’t yet offer a viable alternative to U.S. chips on a large scale. They also caution that authoritarian states could misuse AI.

On the other side of the debate are diffusers, who emphasize that victory in the AI race depends on other countries adopting and running on American compute, cloud, and agent tools. Diffusers warn that overregulation of AI will hamstring U.S. firms. They see the proliferation of American AI technology as inevitable and desirable, and downplay the risks of chip theft. Trump’s deals with Gulf countries represent a big win for the diffuser camp. Although the AI deals were initiated under the Biden administration, the Trump administration supersized them and jettisoned Biden-era restrictions on semiconductor exports.

 

The Devil Is in the Details

In this case, on balance, the upsides of enhanced AI cooperation with the Gulf outweigh are mostly manageable risks. These agreements could promote economic diversification in Saudi Arabia and the UAE and give the United States a leg up in great-power competition by displacing China as the Gulfʼs technology partner of choice.

Another major opportunity for the United States lies in extending the global reach of its AI presence. Gulf networks in Africa and Asia, in partnership with American companies or drawing on the U.S. tech stack, can provide access where U.S. tech firms rarely venture alone, where poor Internet connectivity poses an issue for U.S.-based services, and where cheaper Chinese offerings will prove compelling—even if they aren’t quite as sophisticated. The UAE has already surpassed China as Africaʼs largest investor. Coordinated U.S.-Emirati initiatives can help extend U.S. standards and deliver the benefits of AI to underserved markets.

But leakage is real, and thus important to address now, while the details of the deals are still being hashed out, and many of the chips still need approval from the U.S. Department of Commerce to be shipped to the Gulf. The deals must include provisions that require chip buyers to keep sensitive U.S. technology away from the hardware or employees of companies of concern, such as Huawei. Those terms are especially important for non-American firms, over which the United States government has less regulatory authority. Although the Trump administration announced on December 8 that it would allow the sale of some advanced semiconductors to China, the chips slated for the Gulf are more powerful. Washington must also make plain that deeper military or technological alignment with China puts cutting-edge cooperation at risk.

The United States is justified in asking that partners forswear AI cooperation with U.S. competitors on dual-use technologies, that is, systems that serve both civilian and military purposes (such as drones or satellites). After all, the United States does not want its advanced technologies to be deployed against U.S. forces in a future conflict. But such exclusivity restrictions must be narrowly targeted to the areas of greatest concern—such as those that would erode U.S. military advantages—and must be clearly understood by both sides. Policymakers should also be clear-eyed about the risks that Gulf countries, which have their own laws, values, and priorities, might use AI for domestic repression or foreign meddling. But ultimately, these states do not need to privately possess cutting-edge chips to do so. The United States will have to summon the political will to manage these concerns, just as it does when working with these countries outside the realm of cyberspace.

Washington will, however, have to pay close attention to the potential misuse of cloud computing. This occurs when U.S.-sanctioned actors rent remote access to AI computing power via the cloud—sometimes through cutouts that hide the customer’s identity—allowing them to make use of chips without ever physically holding them. This is a global problem and Washington must structure deals to ensure that Gulf AI firms and data centers using American chips monitor and report suspicious usage with the same urgency that their U.S. counterparts do.

The United States has the leverage it needs to uphold these terms, and it should be willing to use it. Chips sustaining AI need to be replaced and updated every few years. If Saudi Arabia or the UAE violates the terms of any eventual deal, Washington can withhold semiconductor shipments. But Washington should do so only as a last resort.

By filling ambassadorial posts in Abu Dhabi and Riyadh, the Trump administration can help keep channels of communication open and prevent technical disputes from spiraling. It should also expand the Bureau of Industry and Security within the Department of Commerce, which oversees chip exports. And U.S. intelligence agencies must also cooperate closely with U.S. and foreign technology companies to verify that international partners are complying.

 

More Than Just Petrostates

If international AI deals are to help the United States in the long term, they should be designed to complement, rather than cut into, the domestic AI industry. That means Saudi Arabia and the UAE will need to quickly deliver on their promised investments in AI infrastructure within the United States. It also means the United States needs to act with urgency to build AI infrastructure at home, in part by removing permitting bottlenecks and increasing domestic power capacity. Projects in the Gulf already benefit from looser regulations and cheaper energy. The United States’ ability to generate gigawatts of new electricity for AI will set the ceiling for how much global demand can be served from U.S. territory.

Ultimately, the success of any AI deal also relies on getting buy-in from the American public. The agreements with Saudi Arabia and the UAE were brokered in haste and behind closed doors. They have also been negotiated during a time when relatives of top U.S. officials have enriched themselves through real estate and cryptocurrency deals with Gulf countries. If Americans come to see the AI deals as compromised, it could undermine their sustainability and feed a larger domestic backlash over AI. Already, the people involved in this project, including Trump administration officials, Gulf monarchs, and Silicon Valley titans, are polarizing among Americans. Policymakers would be wise to design and implement the AI deals rigorously and publicize the details widely to broaden support.

There are other obstacles to success. Gulf states will have to demonstrate that they can build massive data centers, deliver competitive prices on AI services, and find the demand for the AI capabilities they are building. They must weather market disruptions that could slow the current binge in AI investment and construction. But if Washington and the Gulf capitals can deliver AI collaboration that lives up to the hype, it could be a turning point in the Gulf countries’ evolution from petrostates to global players. The United States, meanwhile, could decisively reclaim its place as the regionʼs partner of choice on the defining technologies of the era.

 

 

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