In mid-July, the U.S. Department of Commerce delayed approving NVIDIA's (NVDA, Financial) export of AI chips to the United Arab Emirates (UAE), stalling a deal once hailed as a "trade breakthrough" by former President Trump. The transaction, initially seen as a certainty, now hinges on new security assurances.
The controversy centers on Abu Dhabi's AI company, G42, which was set to receive about 20% of the chips. The U.S. Commerce Department is concerned that G42's past collaborations could lead to other countries indirectly accessing NVIDIA's advanced chip technology. To address these concerns, G42 has agreed to divest certain partnerships and commit to building a data center in the U.S. for every one constructed in the UAE.
This security impasse has forced a pause in the "Star Gate UAE" data center project, a collaboration involving G42, OpenAI, Oracle, NVIDIA, SoftBank, and Cisco. The initial 200-megawatt cluster was slated for 2026, but delays in chip approval could push this timeline further. Both parties are negotiating enhanced oversight and revised terms.
Investors and industry observers are closely monitoring three key developments: the final approval from the U.S. Commerce Department, revised terms limiting G42's direct chip access, and public statements from NVIDIA CEO Jensen Huang, who continues to advocate for the deal. Future focus will be on the approval process and the ultimate fate of the "Star Gate UAE" project.
