CHINA WATCHU.S.-China “Tech War”: AI Sparks First Battle in Middle East

By Cathrin Schaer

Published 2 October 2023

The U.S. has restricted exports of some computer chips to the Middle East, to stop AI-enabling chips from getting to China. But there’s no information on which countries are affected, or how chips would get to China. What is becoming clear is that AI could well become a new source of friction between democratic and autocratic states.

Just over a month ago, a leading US technology firm made a rather mysterious announcement.

Nvidia, which produces the world’s most advanced computer chips — the small silicon cards needed to run everything from supercomputers to modern cars and cellphones — said the United States government was restricting the export of its most advanced chips to “some Middle Eastern countries.”

Nvidia did not say which countries were affected or why. But for many observers, it was a sign the “tech war” between China and the US had arrived in the Middle East.

For some time now, the US has been trying to get ahead of China when it comes to the development of world-changing artificial intelligence (AI) technology. In an attempt to slow down Chinese AI progress, a recent tactic has been to throttle Chinese access to the computer chips or semiconductors needed for the most advanced artificial intelligence models.

It’s very hard to develop AI without these materials, and they are also mostly produced by US-based companies, including current world leader Nvidia.

That is why last year the US Department of Commerce announced it was restricting exports of advanced chips to China and RussiaThis August’s announcement adds another layer to these export restrictions.

Which Middle Eastern Countries Are Affected?
Neither the US government nor Nvidia is saying. There are some likely candidates though.

My best guess as to the countries under closest scrutiny are Iran, Saudi Arabia and UAE,” suggested John Calabrese, a professor who teaches US foreign policy at the American University in Washington and who has written regularly about China’s presence in the Middle East.

Iran has demonstrated a high level of ‘hacking’ proficiency. Saudi Arabia and UAE have the financial means. Qatar and Israel might also have been named. In all these cases, there would seem to be a reasonable ‘national security’ justification.”

The oil-rich Gulf states are some of the most enthusiastic spenders in the world on AI. Saudi Arabia, the UAE and Qatar all see the ongoing digital transformation of their economies as hugely important in diversifying away from exporting oil. 

Israel is another Middle Eastern country making major investments in AI. Almost all the world’s most advanced chipmakers are already working there. In fact, in 2020, Nvidia bought an Israeli company, Mellanox, and this subsidiary is now its largest base outside the US.