The Biden administration has imposed restrictions on the sale of Nvidia's key microchips to the Middle East due to growing concerns about China's access to critical artificial intelligence (AI) resources. Nvidia, valued at $1.2 trillion, has been directed to obtain permission before exporting certain chips to specific countries in the Middle East, as part of the US government's efforts to strengthen national security measures on advanced semiconductors.

These restrictions are an extension of the United States' strategy to counter China's AI ambitions. The move is aimed at preventing the chips from being resold to China and minimizing connections between Middle East entities and Chinese AI firms. Nvidia's H100 and A100 chips are pivotal for training software like ChatGPT and are pivotal in the global competition for computing power in the realm of AI.

While these chips are already subject to limitations in sales to China and Russia, this recent action signifies a significant broadening of US trade controls beyond these countries. The affected nations in the Middle East have not been specifically disclosed by Nvidia, which revealed the restrictions in a US regulatory filing.

Both Saudi Arabia and the United Arab Emirates have been engaged in discussions with China to strengthen AI collaborations, and they have placed substantial orders for Nvidia's chips. Chinese researchers are actively involved in institutions like King Abdullah University of Science and Technology (Kaust) in Saudi Arabia.

Moreover, the US government has previously identified the UAE as a potential intermediary used by Russia to evade sanctions. The US sanctions regime already prohibits sales to Iran and Syria.

Nvidia acknowledged these new restrictions in a US filing, indicating that during the second quarter of fiscal year 2024, the US government informed the company of additional licensing requirements for a subset of A100 and H100 products destined for specific customers and regions, including certain Middle Eastern countries.