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On Wed, 18 Sept, 8:03 AM UTC
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Microsoft Wants Clarity On Chip Exports To Middle East Amid $1.4B Deal With UAE Firm - Microsoft (NASDAQ:MSFT)
Microsoft Corporation MSFT has called for more transparency on U.S. export controls that have delayed the delivery of AI chips to the Middle East. What Happened: Microsoft has been seeking "clarity and consistency" in U.S. export controls that have impeded the shipment of advanced AI chips to the Middle East, reported the Financial Times. The company had earlier invested $1.5 billion in G42, the largest AI company in the United Arab Emirates, to use it as a gateway to markets in Africa and Asia. See Also: OpenAI's 'O1' Model, Nvidia's AI Demand, Google's Missed Opportunity, And More: This Week In AI However, U.S. restrictions on AI-specialized chip exports to the Middle East, due to concerns over technology leakage to China, have put a damper on some of Microsoft's plans with G42. Despite these setbacks, Microsoft and G42 announced on Tuesday the establishment of two new research institutes in Abu Dhabi. These institutes will focus on developing AI systems for the non-Western world, including languages such as Arabic and Hindi. Why It Matters: In May 2024, it was reported that the U.S. and Saudi Arabia were in talks for a historic pact that could potentially lead to diplomatic ties with Israel. This development was believed to be driven by Saudi Arabia's need for data centers and semiconductors. The U.S. has faced criticism from China for adding several Chinese entities to its export control list. This move is seen as an attempt to restrict Russia's access to advanced U.S. technology. Earlier this year, China also tightened export controls on certain aviation and aerospace technologies and components, citing national security. However, China was pivoting towards a more export-driven growth model, which experts have warned could lead to a potential global trade war. Image via Shutterstock Read Next: Elon Musk Has Secret Service-Like Security Team That Calls Him 'Voyager:' Growing Threats After Tesla Austin Factory Scare Have Led To The Richest Man In The World Leading An Increasingly Isolated Lifestyle Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs
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Microsoft calls for 'clarity' over AI chip curbs to Middle East
Microsoft has called for "clarity and consistency" over US export controls that have held up the shipping of cutting-edge artificial intelligence chips to the Middle East, as the tech giant announces the opening of new AI institutes alongside its Abu Dhabi-based partner G42. The Seattle-based company this year invested $1.5bn in G42, seeking to use the United Arab Emirates' biggest AI company as a gateway to markets in Africa and Asia, where it believes demand for AI is unmet and growing. However, the US has so far restricted exports of chips specialised for AI software to the Middle East, fearing that the technology could leak to China. Microsoft has still not obtained the licences to ship components needed for some of its plans with G42, a company that came under scrutiny from US lawmakers for its past links with Chinese companies. Brad Smith, Microsoft's president and vice-chair, told the Financial Times: "We all need clarity and consistency from the US government in terms of the specifics of the export control regime. There's been a lot of work by the US government over the course of the summer on this in particular, and I feel confident that clarity is emerging." Smith added that while export applications made by Microsoft and others were "not 100 per cent complete, they're getting very close". Despite these delays, Microsoft and G42 announced on Tuesday that they were co-founding two new research institutes based in Abu Dhabi that would focus on building AI systems for the developing world, including in non-western languages such as Arabic and Hindi. Microsoft will provide a multi-million dollar investment and provide access to computing infrastructure for an "AI for Good Lab" that works with non-profits in Kenya to develop tech products. The institutes will focus on using AI responsibly and to address societal issues in the so-called global south, and are part of efforts to show the companies are conscientious users of AI and make the technology available beyond western markets. Peng Xiao, chief executive of G42, said: "The comfort we are giving the US government on the export control front is that we are the home for responsible and secure AI." The push comes as states struggle to regulate the rapidly evolving technology, following warnings that it could create societal harm, from helping to spread misinformation to eliminating human jobs. Xiao, who was born in China, studied in the US and is now a UAE citizen, pointed to the latest release of software by Microsoft-backed OpenAI as an example of the opportunities and threats of AI. While AI could help developers vastly improve their coding skills, Xiao said, "you can imagine it can take someone who knows nothing about code and begin to issue verbal commands [instructing the person how to] build a piece of software that can potentially hack into a phone". Smith also linked responsible use of AI to assuaging US concerns over who gets hold of graphics processing units, the hardware components needed to develop advanced AI models. Oil-rich Abu Dhabi -- which harbours sweeping ambitions to become a global AI hub -- has sought to reassure US officials over their concerns about technology transfer, despite its deep relationship with Beijing. The UAE's efforts to secure access to AI technology are spearheaded by powerful national security adviser and G42 chair Sheikh Tahnoon bin Zayed Al Nahyan, who oversees a sprawling business empire. US private equity group Silver Lake has also backed G42, as has Abu Dhabi sovereign investor Mubadala. Officials and business people involved in the discussions in Washington have said that while commerce and trade officials are broadly comfortable with Microsoft's relationship with G42, some security officials have been more reluctant to allow closer ties between the groups. To appease US concerns, G42 has said it is cutting ties to Chinese suppliers including Huawei and stripping out their hardware. G42 also said in a statement that it this year instituted a policy of not doing business "with any entity" on the US's exports controls list. Xiao said he did not believe the company had done so previously.
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Microsoft is seeking clarity from the US government regarding chip export rules to the Middle East, as it pursues a $1.4 billion deal with a UAE-based AI company. The move highlights the complexities of navigating global tech partnerships amid geopolitical tensions.
Microsoft is actively seeking guidance from the US government regarding the export of advanced chips to the Middle East, as it pursues a significant $1.4 billion deal with G42, a prominent artificial intelligence company based in the United Arab Emirates 1. This move comes amidst growing concerns about technology transfers to the region and highlights the intricate balance between international business opportunities and national security considerations.
The tech giant's request for clarity underscores the complex geopolitical landscape that US companies must navigate when engaging in international partnerships. The US government has been increasingly vigilant about the export of advanced technologies, particularly those with potential dual-use applications that could be utilized for both civilian and military purposes 2.
G42, the UAE-based AI company at the center of this deal, has garnered attention due to its ambitious projects and partnerships. The company has been actively expanding its reach in the tech sector, with a focus on artificial intelligence and cloud computing. However, its ties to the UAE government and potential connections to Chinese entities have raised eyebrows in Washington 2.
The US Commerce Department has been closely monitoring tech exports to the UAE, particularly in light of the country's growing technological ambitions. Officials are concerned about the potential for advanced US technologies to be redirected to China or used for purposes that could compromise US national security interests 2.
By seeking clarification on export rules, Microsoft is demonstrating a proactive approach to compliance and risk management. The company aims to ensure that its partnership with G42 aligns with US export regulations and does not inadvertently violate any restrictions on technology transfers 1.
Microsoft's situation is indicative of a broader trend in the tech industry, where companies must carefully balance global business opportunities with compliance to increasingly complex international regulations. The outcome of this case could set a precedent for how US tech giants engage with partners in sensitive regions 12.
The resolution of Microsoft's inquiry could have far-reaching implications for future technological collaborations between US companies and entities in the Middle East. It may also influence the UAE's aspirations to become a global AI hub and shape the landscape of international tech partnerships in an era of heightened geopolitical tensions 2.
As this situation unfolds, it serves as a reminder of the delicate interplay between technological advancement, international commerce, and national security concerns in today's interconnected global economy.
Reference
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The US government has approved the export of advanced AI chips to a Microsoft facility in the UAE, as part of Microsoft's partnership with Emirati AI firm G42. The deal faced scrutiny due to concerns about potential technology transfer to China.
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Microsoft warns that Biden-era AI chip export controls could inadvertently benefit China's AI sector and undermine U.S. leadership in AI technology. The company calls on the Trump administration to revise these restrictions to maintain U.S. competitiveness and support allies.
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The CEO of UAE's G42 addresses US worries about advanced chip technology potentially reaching China through the Middle East, emphasizing UAE's commitment to safeguarding sensitive tech.
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Microsoft faces scrutiny over its $15 billion investment in UAE-based G42, while analysts predict AI could add $1 trillion to the company's value. The tech giant navigates regulatory challenges and market opportunities in the rapidly evolving AI landscape.
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The United States has implemented a new rule that could potentially increase the export of artificial intelligence chips to countries in the Middle East. This move aims to balance technological advancement with national security concerns.
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