Exclusive / Microsoft says UAE AI chip approval ‘first step’ for Emirati access

Despite US President Donald Trump’s May visit to the Gulf, during which administration officials laid out a framework for hundreds of thousands of advanced semiconductors to be shipped to Saudi Arabia and the UAE, Commerce Secretary Howard Lutnick had yet to issue export licenses, and Microsoft was on the verge of running out of compute capacity in the UAE, according to Smith.

“Thank goodness our license applications were approved when they were,” Smith said.

While Microsoft has gotten the necessary approvals to ship advanced Nvidia chips, G42 — which counts Microsoft as an investor and Smith as a board member — is still waiting.

“The day should come when G42 gets its own license applications approved,” Smith said. “The more familiarity there is across Washington with all of the steps that G42 has taken, I think that will help build the foundation, but it’s a conversation that’s ongoing, and I don’t know that anyone can predict the precise timetable.”

The widespread adoption of AI in the UAE — which leads the world with roughly 60% of the working-age population using the technology monthly — combined with plentiful, inexpensive electricity makes the Emirates an attractive location for building data centers, according to Smith. He also sees potential for the UAE to serve as a gateway to the broader region with computing power and data storage.

The $3.85 trillion Redmond, Wash. company has secured the first export licenses for shipping Nvidia’s advanced GPUs into the UAE during the Trump administration, shipping some of the most advanced chips — and nearly tripling the compute power available to Microsoft in the UAE.

The deal is part of Microsoft’s wider commitment to invest $15.2 billion in the country from 2023 to the end of the decade. The technology giant also plans to build more data centers and train 1 million people in technical know-how.

From 2023 to the end of this year, Microsoft will have poured over $7.3 billion in the UAE, including its equity investment in G42 that saw Smith join the board last year.

By 2030, Microsoft has committed to spending another $7.9 billion.

Something Smith repeated a few times on his swing through here: “This is not money raised in the UAE. It’s money we’re spending in the UAE.”

That the deep-pocketed Emirates is attracting cash of this scale is a testament to its timing on AI (ahead of the pack). The most prolific fundraisers beating a trail to the Gulf — the private equity players and fund managers — are typically making their money on fees. That’s not the case for the technology giants, who will have to lay a physical foundation here in order to serve customers in the region, and beyond.

Indeed, Microsoft’s investment follows a familiar playbook: Smith has made similar announcements in the last few years in Indonesia, France, and the UK, among others. But those agreements have been to the tune of around $2 to $4 billion.

The size of Microsoft’s investment speaks to the opportunity it sees here. The UAE just notched a big victory in the AI race, but as Smith himself predicted, it will not be the last.

American hyperscalers are on track to invest some $1.55 trillion in building AI data center infrastructure between this year and 2027, according to the Financial Times. This is “a bonkers amount of money,” a data center conference attendee told a Barclay’s analyst.