The United Arab Emirates and the United States have formalized a Gulf State agreement to establish the largest artificial intelligence campus outside of the U.S., a key development during Donald Trump’s Middle East visit that included multiple AI-related deals.

Nevertheless, the agreement has sparked concerns due to previous administration restrictions based on fears that China could gain access to important technologies.

The deal to construct the campus will enable the UAE to enhance access to state-of-the-art AI chips. While the U.S. and UAE did not specify which AI chips would be featured in the data center, sources informed Reuters of a potential allowance for the UAE to import 500,000 of Nvidia’s most advanced AI chips annually starting in 2025.

Nvidia’s CEO, Jensen Huang, was seen on television talking with Donald Trump and UAE President Sheikh Mohamed bin Zayed Al Nahyan at the Abu Dhabi palace on Thursday.

This agreement marks a significant win for the UAE, as it navigates its long-standing relationships with allies while also engaging with China, its largest trading partner. The Gulf nation is investing billions to establish itself as a leader in AI. However, its ties with China have previously limited access to U.S. chips under the former Biden administration.

This transaction illustrates the Trump administration’s belief in its ability to securely regulate chip management by mandating that U.S. companies oversee their data centers.

While the U.S. has led in AI technology and innovation, China has recently become a formidable competitor. Despite Trump’s optimism, there are concerns that significant agreements with Gulf countries could diminish U.S. control over this rapidly growing technology, coupled with fears that China might leverage these data centers for its own advantages.

Leading CEOs from AI and semiconductor firms, including OpenAI’s Sam Altman and Nvidia’s Huang, seem supportive of such transactions, as they present opportunities to showcase their products on a global scale and derive substantial benefits.

According to the White House, the AI contract encompasses investment, construction, and funding in U.S. data centers that match the scale of those in the UAE.

“The agreement also commits the UAE to align its national security regulations more closely with those of the United States.

The focal point of the announced contract is a 10-square-mile (25.9 square kilometers) AI campus in Abu Dhabi, boasting a capacity of 5 gigawatts for AI data processing.

The campus will be developed by G42, a company backed by Abu Dhabi, but U.S. Secretary of Commerce Howard Lutnick stated that “U.S. companies will manage data centers and supply American-managed cloud services throughout the region.”

In a U.S. fact sheet, Qualcomm, a chip manufacturer involved in AI engineering centers, noted that Amazon Web Services, the cloud division of the technology and commerce firm, will collaborate with local partners to enhance cybersecurity and cloud integration.

Historically, the U.S. pursued protective measures to limit China’s access to advanced semiconductors.

Regulations are being relaxed under Trump, and AI Czar David Sacks informed Riyadh on Tuesday that the Biden administration’s export controls “are not intended to include friends, allies, or strategic partners.”

Granting the UAE access to cutting-edge chips made by companies like Nvidia signifies a substantial change.

“This transition will enable the UAE to strengthen its technological partnership with the U.S. while sustaining trade relations with China,” said Mohamed Soliman, a senior fellow at the Middle East Institute.

“It doesn’t imply a severance from China; rather, it reflects a reorientation of our technology strategy to adhere to U.S. standards and protocols, especially in key areas like computing, cloud computing, and semiconductor supply chains,” he stated.

AI was a key topic when Bin Zayed Al Nahyan visited Washington on the last day of Biden’s administration.

G42 and MGX, the state-affiliated entities spearheading the UAE’s AI investment initiative, have also invested in U.S. firms such as OpenAI and Elon Musk’s Xai, while Microsoft committed $1.5 billion to G42 last year.

The companies indicated that the agreement was bolstered by security guarantees, and under U.S. influence, G42 has started dismantling previous Chinese hardware and divesting from Chinese investments.

Nonetheless, Chinese firms like Huawei and Alibaba Cloud continue to operate in the UAE, and the flow of AI chips to China has been monitored by various nations, including Malaysia, Singapore, and the UAE, according to sources who spoke with Reuters in February.