US Restricts AI Chip Exports to the Middle East

The United States has reportedly become more cautious about exporting AI chips and technology to the Middle East. Authorities are said to be slowing down the issuance of large-volume export licenses for so-called accelerator chips. This development is bad news for Nvidia and AMD, both of which export a portion of their chips to the Middle East. The US is currently doing everything it can to prevent these AI chips from falling into the hands of the Chinese.

This news might have contributed to Nvidia’s stock dropping by about 3.7% in yesterday’s trading session. The hype around the chip manufacturer is facing resistance, partly because Dell, another AI beneficiary, disappointed investors yesterday, causing its stock to plunge 17% in after-hours trading.

Nvidia: Limited Export Licenses for AI Chips

According to Bloomberg, Washington is reviewing its national security strategy concerning AI developments in the region, as informed sources report. The primary companies affected are chip manufacturers Nvidia and AMD.

However, it’s unclear how long this review will take. There is also no concrete definition of what constitutes a large shipment, according to people familiar with the matter who spoke to Bloomberg. Countries like the United Arab Emirates and Saudi Arabia are eager to import chips used in AI data centers in large quantities.

AI accelerators, a category developed by Nvidia, help data centers manage the information overload brought on by chatbots and other AI tools. They have become essential equipment for companies and government agencies looking to build AI infrastructure.

Export Restrictions on AI Chips

In October, the US Department of Commerce extended chip export restrictions, initially focused on China and other foreign adversaries, to large parts of the Middle East. Companies now need a special license to deliver cutting-edge semiconductors and chip production equipment to countries like Saudi Arabia and the United Arab Emirates.

For the past few weeks, applications for such export licenses have reportedly been delayed or left unanswered. This has affected exports to customers in the United Arab Emirates, Saudi Arabia, and Qatar, among others. Besides Nvidia and AMD, Intel and the startup Cerebras Systems also manufacture accelerator chips. All four companies declined to comment.

A brief report from Bloomberg explains why the US is restricting the issuance of export licenses for AI chips from Nvidia and other chip manufacturers:

The Commerce Department in Washington stated that “protecting national security” is the top priority.

“In regard to the most advanced technologies, we conduct thorough reviews where we meticulously examine license applications from applicants like Nvidia, who seek to ship these advanced technologies globally,” a representative of the department explained. “As always, we are committed to working with our partners in the Middle East and around the world to protect our technological ecosystem.”