US rewards UAE with chip export relief after Iran war support

The United Arab Emirates, which sided with the US and took part in strikes against Iran, has received a reward in the form of eased semiconductor export restrictions.

The US government recently relaxed AI chip export controls on the UAE in recognition of the country's support for airstrikes against Iran and its role in keeping oil shipments flowing through the Strait of Hormuz, the Wall Street Journal reported Thursday.

The UAE has deepened security cooperation with the United States since signing the Abraham Accords normalizing ties with Israel in 2020. Early in the war, however, it urged Washington to hold back from fighting Iran. After coming under direct Iranian drone strikes, the UAE reversed course and actively joined US and Israeli military operations, including joint airstrikes.

More recently, the UAE participated in dozens of strikes on Iran alongside US forces and intercepted hundreds of Iranian missiles. A US government official said the White House came to regard the UAE as a reliable ally for those efforts. On July 10, the Commerce Department elevated the UAE to the same export-control tier as South Korea, India and European nations for purchases of technology, military equipment and energy infrastructure that could be diverted to military use. The UAE had previously been grouped with strictly regulated countries including China and Yemen.

Going forward, G42, the UAE's leading AI company, will be able to purchase AI chips from US chipmakers including Nvidia without a separate license for at least nine months. Large-scale data center projects that Microsoft and OpenAI are pursuing in the UAE are also expected to gain momentum. Until now, exporting the semiconductors needed to run AI models required Commerce Department approval, a process that often dragged on for months.

Industry observers expect the deregulation to generate billions of dollars in economic benefits. Yousef Al Otaiba, the UAE's ambassador to the United States, called the move "an opportunity to further advance the deep and trusted partnership between the UAE and the United States that has developed over decades."

The decision has also drawn political scrutiny, however, given that Sheikh Tahnoon bin Zayed Al Nahyan, the UAE's national security adviser, became a key business partner of the Trump family last year.

The UAE has been lobbying in Washington for access to US AI chips since the Joe Biden administration. Those efforts were led by Sheikh Tahnoon, the national security adviser and a brother of UAE President Sheikh Mohamed bin Zayed Al Nahyan. Sheikh Tahnoon, who is the effective owner of G42, has also worked to cultivate ties with the Trump family.

Before Donald Trump's inauguration last year, Sheikh Tahnoon and other UAE officials signed a deal to acquire a 49 percent stake in World Liberty Financial, a cryptocurrency firm founded by the Trump family, for $500 million. The UAE also pledged to invest $1.4 trillion in the United States.

After the war with Iran broke out, UAE officials visited the White House directly to again request an upgrade in the country's export-control rating. At the time, the UAE pointed to India as a precedent — a country that gained expanded trade benefits after becoming a US "major defense partner" in 2016.

At the recent Group of Seven summit in France, Trump praised UAE President Sheikh Mohamed bin Zayed Al Nahyan as "a true angel," saying the UAE had long been a US ally but that the relationship had grown even closer since he took office.