The United States has allowed Microsoft to ship the latest Nvidia artificial intelligence chips to the United Arab Emirates for the first time. The move enables the Seattle-based company to expand its multibillion-dollar investment in the Gulf region, as the Middle East becomes a critical front in Washington’s strategic tech rivalry with Beijing.

In May, US President Donald Trump struck a deal with UAE President Sheikh Mohamed bin Zayed Al Nahyan to develop a vast AI data center campus in Abu Dhabi. Microsoft-backed G42 is a key partner in the project.

However, the initiative had been delayed by the Department of Commerce’s export controls on the powerful Nvidia chips needed to operate advanced AI systems.

Brad Smith, Microsoft’s president, told the Financial Times on Monday that in September, the group became “the first company to receive a licence under the Trump administration” to export Nvidia’s AI chips to the UAE.

“You cannot get those export licences unless you’re able to meet the requirements that have been imposed by the US government,” Smith told the news outlet. “We earned it by satisfying very stringent cybersecurity, physical security, and other security requirements.”

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Microsoft expands Gulf AI investment

Microsoft now plans to increase its UAE investment from $7.3 billion over the past three years to more than $7.9 billion from 2026 to 2029. Of that, $5.5 billion will go toward capital spending for artificial intelligence and cloud infrastructure.

While the company has not specified where it intends to deploy the new batch of Nvidia chips, approval was required from the US Department of Commerce to export such chips to countries, including the UAE.

In 2024, Microsoft invested $1.5 billion in G42, the Emirati AI company spearheading the Abu Dhabi facility announced in May. The deal was viewed as critical to Washington’s strategy to strengthen its alliance with the UAE and limit China’s influence in regional AI development.

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UAE places AI at core of national strategy

The UAE has placed artificial intelligence at the heart of its economic diversification strategy and governance initiatives. According to a recent Microsoft survey, the country is becoming a global leader in AI adoption.

The region is also expected to play a significant role in spreading AI technology across what Smith described as the “global south”, encompassing the Middle East, southern Europe, Africa, and East Asia.

“We run a risk that AI diffusion will become increasingly uneven,” Smith told the Financial Times, arguing that the imbalance could deepen global economic inequality.

“There obviously is a race between the US and China,” Smith told the UK-based news outlet. “People often focus for first and foremost on the race for advanced AI model development.”

“But I think the AI diffusion race is probably even more important than the race on the technology frontier,” he added. “And this is where the stronger relationship between the United States and the United Arab Emirates becomes critical.”

Increased AI capacity requires further licences

The newly granted permits will allow Microsoft to make a fourfold increase in the AI computing power it can deploy in the UAE.

“I fully anticipate we will be needing more licences, I would venture within the next six to 12 months, if not sooner,” Smith said.

“I have confidence in our ability to get these licences given the work that we have done to meet the stringent requirements and conditions that the administration quite properly has established,” he added.