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Investing.com-- A landmark agreement to supply the United Arab Emirates with advanced artificial intelligence chips from Nvidia (NASDAQ:NVDA) is facing internal resistance within the Trump administration due to national security concerns, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.
Although President Donald Trump publicly backed the deal during his Middle East trip in May, some administration officials are reportedly holding up its implementation amid fears that China could gain indirect access to cutting-edge U.S. technology, the report said.
At the center of the dispute is Abu Dhabi-based AI firm G42, which was slated to receive about 20% of the chips under the agreement. The U.S. Commerce Department is not expected to approve direct chip shipments to G42 at this time, though that stance could change, the WSJ report stated.
Officials have discussed modifying the deal to exclude G42, a move that could upset Emirati officials who see the firm as integral to their AI ambitions, the WSJ reported.
Despite delays, both sides remain optimistic. U.S. Commerce Secretary Howard Lutnick expressed confidence that the agreement would proceed, while UAE ambassador Yousef Al Otaiba called the deal “a major win” for both countries.
Still, the slow progress has frustrated tech executives and divided U.S. policymakers, some of whom worry that rivals like Huawei could fill the gap if the deal collapses, the WSJ report added.
The report comes after Nvidia said it has received assurances from the Trump administration that it can sell its H20 chip in China amid easing U.S.-China trade tensions.