The Trump administration is preparing to announce an agreement to give Saudi Arabia greater access to cutting-edge semiconductors.
This move could pave the way for more data center space in the Gulf country despite reservations from some US officials regarding its connections to China.
According to people who asked to remain anonymous because the discussion was private, the deal would increase Saudi Arabia’s capacity to purchase chips from companies like Nvidia Corp. and Advanced Micro Devices Inc., which are regarded as the industry leaders for developing and executing artificial intelligence models.
President Donald Trump has already landed in Saudi Arabia and is just getting started on a broader Middle East trip. He could announce the deal as soon as this week.
Trump shows commitment to send advanced American tech to the Gulf
Following an early-stage agreement that would give Saudi Arabia greater access to cutting-edge semiconductors, reports indicate that the two governments are still working out several important details.
The United States was primarily concerned about China’s potential to obtain chips shipped to Saudi Arabia, either by rerouting actual shipments or using the chips’ digital capabilities.
In response to growing concerns about China gaining access to the chips, David Sacks, a White House AI adviser, shared an X post last week highlighting that they must act swiftly to stop the illicit diversion of cutting-edge semiconductors into China.
However, he mentioned this objective should not prevent legitimate sales to the rest of the world as long as partners adhere to appropriate security requirements.
According to reports, the discussed provisions would result in data centers using American chips being subject to US government control. It is unclear to whom or under what circumstances access would be allowed.
As Trump officials prepare to revise US regulations governing the export of cutting-edge chips globally, the agreement is one of two significant AI chip accords they are negotiating. Later in his trip, Trump might announce the second deal with the United Arab Emirates.
When considered collectively, the agreements show that Trump is far more ready than President Joe Biden to see cutting-edge American technology sent to the Gulf, where he also has significant business interests and sovereign wealth funds have committed significant US investments.
China’s access to American technology results in growing fears in Washington
Since 2023, Washington has mandated that companies seeking to sell AI chips to the United Arab Emirates, Saudi Arabia, and other Middle Eastern nations obtain a license, largely due to worries that the hardware might end up in Beijing’s hands.
During most of last year, Biden officials discussed what terms should be placed on those shipments to protect American technology from China without making it so restrictive that third countries completely refuse US hardware.
During those discussions, Saudi officials reportedly started working with Biden’s team to negotiate a bilateral agreement, according to those who know the situation. However, following Trump’s victory in the US presidential election, they stopped having those discussions, just like the UAE did.
That agreement is now in Trump’s own version. According to people familiar with the situation, the two sides have also discussed the establishment of so-called data embassies, which would allow data centers to be subject to foreign laws rather than local data protection regulations, in addition to provisions about facility access.
According to a draft law outlining the data embassies arrangement, the purpose of such a provision would be to assist Saudi Arabia in creating an “attractive environment for foreign governments and private sector entities to develop and adopt such technologies for peaceful purposes and uses.” Despite omitting the US agreement, the law emphasizes Saudi Arabia’s geographic location and capacity to link three continents.
Meanwhile, some European nations, like Estonia, have depended on comparable digital embassies to run government IT infrastructure abroad, which is intended to mitigate security threats.
The Gulf region is also starting to take notice of the concept. On the other hand, the Abu Dhabi AI powerhouse G42 is looking into ways to support vital infrastructure and establish digital embassies through government partnerships.
