The Scoop
ABU DHABI — The US has approved the sale of cutting-edge Nvidia chips to G42, the company at the center of the United Arab Emirates’ efforts to become a global leader in artificial intelligence, according to a person with knowledge of the matter.
The approval, which came earlier this year but has not been reported, is a major milestone for the ambitions of the UAE and the broader Gulf region. The area is becoming an increasingly important global technology hub — but Biden administration concerns about their ties to China have been obstacles to gaining access to key assets, like cutting-edge chips, which face US export curbs to the region.
G42 is only just beginning to deploy the chips, including a sizable order of Nvidia H100 models, but the effort has been years in the making. Long before ChatGPT captivated the world and global demand for Nvidia’s most advanced AI chips exploded, the UAE was laying the groundwork to be a serious competitor in the global AI race.
It has made significant, long-term investments in innovations that protect sensitive data, making it exceedingly difficult for anyone but the owner to access. Semafor has learned new details of those efforts, which helped lead US officials to approve the sale of the AI chips.
New data centers in the country are physically locked down and have been built from the ground up with hardware made exclusively by Western nations to avoid the possibility of a Chinese backdoor, people familiar with the matter said.
Older data centers have been stripped of any parts with ties to China, even if those parts are unplugged and not being used.
The compute portion of its data centers, which use military-level FIPS 140-2 encryption, is physically separated from all other systems, from security cameras to cooling. That separation reduces the likelihood that attackers could use vulnerabilities in ancillary hardware to worm their way into the servers.
Customers, workers, and visitors are all screened extensively, and Chinese nationals are not allowed to work at the data centers.
The facilities employ wide-ranging telemetry of everything that happens inside, giving G42 the ability to monitor anomalies in real time, including fluctuations in compute levels that might suggest a customer is building AI models large enough to create national security concerns.
It has also hired US Department of Defense contractors to “red team” its data center defenses to find any holes that might allow intrusions by the Chinese or others.
And since last year, G42 has been training its advanced AI models in data centers in California and Texas through a commercial partnership with AI chip maker Cerebras, as it builds its infrastructure in the UAE.
In a sign of the region’s growing tech importance, Microsoft in April made a $1.5 billion investment in G42, a move that drew some criticism in Washington because of the UAE firm’s past investments in Chinese AI ventures and whether that could lead to intellectual property and advanced hardware flowing to America’s most powerful rival. Microsoft President Brad Smith joined G42’s board of directors.
G42 and Nvidia declined to comment.
Semafor reported earlier this week that a likely approval for Nvidia chips is drawing nearer for Saudi Arabia.
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Behind the scenes, G42 had already been working on building advanced data centers secure enough to satisfy the demands of the most hawkish Department of Defense officials.
In anticipation of US concerns, the company divested from Chinese firms in November 2023 and cut off other business relationships with Chinese firms, effectively betting on the strength of the UAE’s alliance with the US and its technology. In January, then-Congressman Mike Gallagher, a China hawk, called for a probe of G42 and its Chinese investments.
The UAE firm’s effort has its roots in a US law passed in 2018 that forced the Emirates to invest in its own data center muscle. The Cloud Act required cloud companies like Microsoft and Amazon to hand over customer information if subpoenaed in a criminal investigation, even if it is on data centers outside US jurisdiction. China has enacted similar extraterritorial reach in its data laws.
The UAE and other countries viewed the laws as taking away their data sovereignty, giving foreign countries access to sensitive data. For instance, the UAE is building a national DNA database of Emirati nationals that it uses for medical and public health research.
The UAE could build secure data centers, but building robust cloud services just to duplicate the work of companies like Amazon and Microsoft, which had spent decades and billions of dollars perfecting their services, would have been costly.
So G42 instead invested heavily in software that would take advantage of Microsoft’s new hardware encryption technology. Building that new layer allowed G42 to promise its customers data sovereignty while still using the Azure cloud service. Microsoft would still be required to hand over data if subpoenaed by a US court, but it would be encrypted.
The effort is now a product that G42 offers to other customers, including countries that want to build out cloud computing capacity while retaining sovereignty over their data.
In meetings that began in 2022, Microsoft took notice of G42’s work atop the software giant’s Confidential Computing technology. The technology represented an opportunity for Microsoft to boost sales of Azure.
That ultimately led to Microsoft’s investment in G42, which could be a valuable conduit for the US company to expand its Azure data center business into new parts of the world.
For G42, the partnership and new chip licenses could help pave the way for the UAE to one day construct massive data centers useful in training and running inference for advanced foundation AI models.
The UAE has invested in a nuclear power plant — and is pouring money into a major expansion — that could be used to power future data centers that many researchers believe will one day be necessary to develop AI with human-level intelligence.
Reed’s view
Getting an inside view into the UAE’s efforts to convince its American allies that it’s a safe bet is crucial to understanding the dynamics of the global AI race.
While Washington often frames it as the country needing to pick sides between America and China, the US and the UAE’s interests are fairly aligned. There is always a risk of the Chinese breaching any system, including US data centers, which could possibly be even more of a risk compared to ones in the UAE, considering the extensive work G42 has had to do to win over American officials who gave their blessing for Microsoft’s investment.
The bigger picture is that when the UAE begins building some of the largest data centers in the world, which it can power with nuclear reactors (it’s already spun up four of them), it will unlock even more of the country’s potential to become a technological powerhouse.
One thing that hasn’t been well understood is that G42, with its Microsoft investment and partnership, will effectively help spread US technology in emerging markets, where Chinese companies might otherwise settle in.
Those markets aren’t usually profitable in the short term for Microsoft. But G42, with help from the UAE, can view those markets as long term bets that are also in the national interest. And G42’s layer of software aimed at data sovereignty may also give emerging market customers a little more comfort than if they were working directly with Microsoft, which they might view as a step closer to the reach of the US government.
Room for Disagreement
The UAE-China economic relationship remains close, with the UAE exporting oil and importing Chinese goods from sneakers and road signs to cars and steel. Chinese Premier Li Qiang was in Abu Dhabi this week where he met with President Sheikh Mohammed bin Zayed and marked 40 years of diplomatic ties between the two countries.
China and the UAE “have maintained close communication and coordination on multilateral platforms, continuously contributing to peace, stability, prosperity, and development of the region and the world at large,” Li said.
The volume of non-oil trade between the two countries reached $81 billion in 2023, a 4.2% increase over the previous year, according to Emirates News Agency. This makes China the UAE’s top non-oil trading partner.
Notable
- Elon Musk’s xAI supercomputer powered on in Memphis last week. Colossus, stuffed with 100,000 of Nvidia’s H100 chips, is a controversial test case of the advances — and unintended consequences — of artificial intelligence. NPR looks at how Memphis became the battleground.