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The US has restricted exports of some computer chips going into the Middle East. It's meant to stop AI-enabling chips from getting to China. But there's no information on which countries or how chips would get to China.Just over a month ago, a leading US technology firm made a rather mysterious announcement.
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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 US 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, 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 Russia. This August's announcement adds another layer to these export restrictions.
Which Middle Eastern countries are impacted?
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's 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 biggest 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.
Why does the US want to control chip exports into the Middle East?
Announcing the export restrictions, the US government said AI-enabling chips were "technologies that are force multipliers for military modernization and human rights abuses."
"And the primary concern is that Chinese firms may see Middle Eastern countries as a means of evading restrictions and acquiring access to [advanced chips] they can't otherwise buy," said Christopher Miller, author of the 2022 book, "Chip War: The Fight for the World's Most Critical Technology."
"The growing presence of Chinese tech firms like Huawei in Middle Eastern markets is part of what is driving these concerns," Miller, a professor of international history at Tufts University in the US, told DW.
A 2022 study by the US-based Center for Emerging Technologies, which looked at where the Chinese military was getting AI-enabling chips, found that most of the purchases were not made directly but came via intermediaries, "including both officially licensed distributors and shell companies."
In June this year, Reuters journalists reported on the underground trade in advanced chips in China. Chinese vendors said they often got the chips from companies registered in other countries, including India, Taiwan, and Singapore.
The Gulf and China
This sort of leakage might also be a possibility in the Middle East, because the countries who are investing heavily in AI have also deepened their ties with China over the past five to 10 years.
Saudi Arabia's tech and scientific cooperation with China has been getting stronger for about seven years, researchers at the Washington-based Carnegie Endowment wrote in an August 2023 study.
A significant number of students and teachers at the King Abdullah University of Science and Technology (KAUST) are Chinese. Cooperation between KAUST and various mainland China research organizations has grown because of the personal links formed there, the Carnegie Endowment study noted.
KAUST is supposed to get 3,000 of Nvidia's advanced H100 chips by the end of this year.
The UAE is in a similar position with AI. It established a Ministry of Artificial Intelligence in 2017 and already has its own advanced AI model called Falcon. At the same time, the Emiratis have acquired something of an untrustworthy reputation. In early September, officials from the European Union, US and UK visited the country to try to discourage the Gulf state from sending sanctioned goods to Russia. This apparently includes AI-enabling chips.
"None of this is to say that the US thinks the UAE and Saudi Arabia will intentionally deliver such technology to China and Russia," Mohammed Soliman, director of the strategic technologies and cyber security program at the Washington-based Middle East Institute (MEI), told DW. The US is an important partner for both countries and they wouldn't want to provoke tensions, he argued.
"US officials are probably more worried that Nvidia chips are more exposed to espionage, reverse-engineering [when products are deconstructed to extract information] or unintentional transfer to Russia or China, given the latter two countries' elevated presence in Gulf nations," he suggested.
Israel's Chinese connections growing
Israel also has deepening ties to China. Huawei and Xiaomi both have research centers there and Chinese investors have funded venture capital firms that invest in local chip-makers.
In the recent past, US tech companies like Intel appear to have used their Israeli bases as a workaround to be able to keep exporting chips to China, Danit Gal, a researcher focusing on technology, wrote in a 2019 paper for the US-based Council on Foreign Relations.
"China's demand for alternative commercial technology trade partners in light of tightening American trade restrictions is an unexpected economic boon to Israel," she argued. But it can't go on forever, Gal noted: "The importance of chips for technological advancement and military use means Israel's position … is bound to attract Washington's attention."
Israel might have to balance its Chinese investors with its American ally's needs more carefully, but the MEI's Soliman doesn't believe the newly announced export restrictions will apply to that country.
"Israel does have closer relations with China and Russia than the US would like," he conceded, "[but] Israel and the US still consider each other extremely close allies, with the US sharing some of its most advanced and sensitive defense tech with Israel."
Having said that, the export restrictions on chips have probably already impacted Nvidia in Israel. US export rules like those announced also apply to products made either wholly or partially as the result of US technology — that is, it doesn't matter if the Nvidia chips are made in Israel or the US, the same rules apply. Reports suggest that China was already a major client of Nvidia Israel.
How political is the export ban?
Human rights may well play a role, said Owen Daniels, a fellow at the Center for Security and Emerging Technology. "Democratic AI" is important to the US and its allies, he noted, and there are fears about AI being used for repression by authoritarian states.
However, neither Daniels nor other experts DW spoke with for this story, thought the export limits were a way to put political pressure on Middle Eastern countries around the sorts of larger deals currently being negotiated, like the Saudi-US defense pact or Saudi-Israel normalization.
"Rather, we might think of these controls as sending a message to Gulf partners about the seriousness with which the US regards tech competition with China," Daniels told DW. "And it will be important to track the long-term impacts of these controls on relations between democracies and autocracies around emerging technology," he added. AI could well become a new source of friction between democratic and autocratic states, Daniels concluded.
Edited by Ben Knight
(The above story first appeared on LatestLY on Oct 01, 2023 12:50 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
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