AI in the US-China "tech war" starts the first conflict in the Middle East

 AI in the US-China "tech war" starts the first conflict in the Middle East

A prominent US technology company issued a pretty enigmatic announcement a little more than a month ago.

The most cutting-edge computer chip manufacturer, Nvidia, said that the US government was limiting the shipment of its most cutting-edge chips to "some Middle Eastern countries." Computer chips are tiny silicon cards that power everything from supercomputers to contemporary vehicles and telephones.

Nvidia omitted to mention which nations were impacted or why. But many observers saw it as a sign that the US-China "tech war" had reached the Middle East.

The US has been working for some time to surpass China in the creation of game-changing artificial intelligence (AI) technology. A recent strategy has been to restrict Chinese access to the semiconductors or computer chips required for the most sophisticated artificial intelligence models in an effort to hold down Chinese AI development.

Without these, it is very difficult to create AI, and most of these components are made by US-based businesses, including the current global leader Nvidia.

Because of this, the US Department of Commerce declared last year that it would limit the export of advanced semiconductors to China and Russia. The announcement made in August this year adds still more layer to these export limitations.

Which nations in the Middle East are affected?

Nvidia and the US government are both silent. But there are some likely contenders.

Iran, Saudi Arabia, and the United Arab Emirates are the nations that, in my opinion, are being closely watched, according to John Calabrese, a professor of US international affairs at the American University in Washington who frequently writes about China's influence in the Middle East. Iran has proven to have a high level of 'hacking' expertise. The financial resources are in Saudi Arabia and the UAE. Israel and Qatar may have also been mentioned. There would seem to be a valid "national security" basis in each of these situations.

The Gulf countries, which are rich in oil, are some of the countries that spend the most on AI. The ongoing digital transformation of their economy is seen as being of utmost importance by Saudi Arabia, the UAE, and Qatar in order to diversify away from oil exports.

Another Middle Eastern nation making significant AI efforts is Israel. The majority of the most sophisticated chipmakers in the world are already employed there. In fact, Mellanox, an Israeli startup that Nvidia acquired in 2020, is currently the company's biggest international base.

The US wants to restrict chip exports to the Middle East for what reason?

The US government stated in announcing the export restrictions that AI-enabling devices were "technologies that are force multipliers for modernization of the military and human rights abuses."

According to Christopher Miller, author of the book "Chip War: The Fight for the the globe's Most Critical Technology," the main worry is that Chinese companies may use Middle Eastern nations as a way to get around regulations and gain access to [advanced chips] they can't otherwise purchase.

Miller, an educator of international history at Tufts University in the US, told DW that "the growing presence of Chinese tech firms including Huawei in Middle Eastern markets is part of the phenomenon that is driving these concerns."

According to a 2022 study by the US-based Center for Emerging Technologies that examined the sources of the Chinese military's AI-enablement chips, the majority of the acquisitions were done indirectly through middlemen, "including both officially licensed distributors and shell companies."

Journalists from Reuters wrote about the China advanced chip black market in June of this year. Chinese sellers claimed that they frequently purchased the chips from businesses registered in nations other than their own, such as Singapore, Taiwan, and India.

Gulf of Aden and China

Given that the Middle Eastern nations that are making significant investments in AI have also strengthened their ties with China over the past five to ten years, this kind of leakage may also be a possibility there.

According to researchers at the Washington-based Carnegie Endowment, Saudi Arabia's technological and scientific collaboration with China has been growing for nearly seven years.

The King Abdullah University of Science and Technology (KAUST) has a sizeable Chinese population among both its students and faculty. The Carnegie Endowment study observed that due of the interpersonal connections made there, collaboration between KAUST and numerous mainland China research organizations has increased.

By the end of this year, 3,000 of Nvidia's cutting-edge H100 chips should arrive at KAUST.

Similar circumstances exist with AI in the UAE. In 2017, it established a Ministry of AI, and it already has a sophisticated AI model dubbed Falcon. The Emiratis have also developed a reputation for being quite unreliable. Early in September, representatives from the US, UK, and EU visited the nation in an effort to persuade the Gulf state not to deliver Russia any commodities that were subject to sanctions. Chips that enable AI are reportedly included in this.

None of this implies, according to Mohammed Soliman, director of the strategic innovations and cyber security program at the Washington-based Middle East Institute (MEI), that the US believes that the UAE and Saudi Arabia will knowingly transfer such technology to China and Russia. He claimed that because the US is a significant partner for both nations, neither would want to incite hostility.

Given China and Russia's increased presence in Gulf states, he speculated, "US officials are probably more concerned that Nvidia chips are more exposed to espionage, the process [when products are disassembled to extract information] or unintentional transfer to China or Russia."

Israel's ties to China are expanding

Israel and China are developing closer ties. There are research facilities for both Huawei and Xiaomi, and Chinese investors have supported venture capital firms that make investments in regional chip manufacturers.

Recently, US IT corporations like Intel seem to have found a way to continue supplying chips to China by using their Israeli locations. In a piece from 2019 for the Council on Foreign Relations, situated in the US, technology expert Danit Gal wrote.

"China's demand for substitute commercial technology trade partners in light of strengthening American trade restrictions is a surprise economic boon to Israel," the author claimed. But it can't last forever, according to Gal: "Israel's position... is bound to attract Washington's attention given the importance of chips for both technological advancement and military use."

Israel may need to more carefully weigh the demands of its Chinese investors with those of its American ally, but the MEI's Soliman doesn't think the recently announced export limits will apply to that nation.

He acknowledged that although "Israel does have closer ties with China and Russia than the US would like," "[the US] still considers Israel and the US to be extremely close allies, with the US sharing some of its most cutting-edge and sensitive defense tech with Israel."

Having said that, Nvidia in Israel has undoubtedly already been hampered by the chip export limitations. The recently established US export regulations also apply to anything created entirely or in part using US technology; in other words, whether Nvidia chips are produced in Israel or the US, the regulations are the same. According to reports, Nvidia Israel already had a sizable clientele in China.

The export prohibition is how much political?

According to Owen Daniels, a fellow at the Center for Security and Emerging Technology, human rights may very well be involved. He pointed out that "democratic AI" is significant to the US and its allies and that there are worries that AI would be employed for repression by authoritarian nations.

Daniels and other experts DW consulted for this story did not share Daniels' opinion that the export restrictions may be used to exert political pressure on Middle Eastern nations in relation to the kinds of broader agreements that are presently being negotiated, such as the Saudi-US defense treaty or Saudi-Israel normalization.

Instead, Daniels told DW, "we might think of these controls as conveying to Gulf partners the seriousness with which the US regards tech competitiveness with China." The long-term effects of these regulations on the interactions between democracies and autocracies regarding developing technology will also need to be monitored, he continued. Daniels came to the conclusion that AI might likely develop into a new point of contention between democratic and autocratic regimes.