RPT-BREAKINGVIEWS-Trump’s Saudi victory lap belies AI fears

By Jonathan Guilford

NEW YORK, May 13 (Reuters Breakingviews) - The United States does not hold a monopoly on technological breakthroughs. As it sought to contain China’s advances in artificial intelligence, President Joe Biden’s administration tried to use restrictions on cutting-edge chips from Nvidia NVDA.O as a cudgel, slowing progress elsewhere. His successor Donald Trump, who just kicked off a Middle East tour in Saudi Arabia, is now changing tack - by making use of U.S. silicon contingent on spurning Chinese alternatives.

Trump on Tuesday announced a lump of investment deals with Saudi Arabia which the White House claimed tops $600 billion in value, encompassing cooperation between the nation’s firms and promised supplies of weaponry. Within the grab-bag came news from Nvidia that it will work with Humain, an AI firm backed by Saudi’s Public Investment Fund, to set up facilities with enough chips to consume up to 500 megawatts of power. That was swiftly followed by a Bureau of Industry and Security announcement that any use of Chinese rival Huawei's competing Ascend chips, anywhere in the world, now constitutes a violation of U.S. export controls.

Under so-called AI diffusion rules implemented under Biden, Saudi and its neighbors saw their access to U.S. AI-powering microchips limited. Trump officials had blasted this as misguided, with AI czar David Sacks saying that there is no risk “with a friend like Saudi Arabia” and that the U.S. does not need to block the global spread of its technology. The Department of Commerce rescinded the Biden-era controls on Tuesday.

The Biden agenda reflected an implicit assumption that U.S. tech was superior, and that the key priority was blocking Chinese access to it. DeepSeek, a breakthrough AI model, showed what firms in the People’s Republic could do when forced to design around restricted supplies. Now, chipmaker Huawei has launched updated systems using Ascend chips that, while less advanced than Nvidia’s state-of-the-art products, provide a lot of brute-force grunt.

Trump and Nvidia’s Humain and export control gambits have a blunt logic. If buyers are forced to use Chinese silicon, the country’s firms have captive demand that can fund rapid development. Opening up U.S. supplies to allies helps to contain this dynamic – and so does making it harder for interested customers like Saudi and the United Arab Emirates to buy Chinese.

How this can be practically enforced is unclear. Locking the world into American supply chains, though, would bolster Nvidia and its peers. After taking a $5.5 billion hit from tightened restrictions on even its cut-down products for the Chinese market, shares of the firm led by CEO Jensen Huang surged over 6% on Tuesday. If you can’t beat them, make others join you.

Follow @JMAGuilford on X

CONTEXT NEWS

The White House on May 13 announced a series of investment commitments between the U.S. and Saudi governments and firms from the respective countries. Nvidia said that it will work with Humain, an artificial intelligence startup backed by Saudi Arabia’s Public Investment Fund, to build new AI facilities in the country.

The U.S. administration is working on deals to allow greater access to AI chips for Saudi Arabia and the United Arab Emirates, Bloomberg reported.

Separately, the Department of Commerce rescinded a set of rules implemented under President Joe Biden that controlled the export of AI chips, announcing that it will impose a new set of guidelines. The Bureau of Industry and Security also issued guidance that using Ascend chips manufactured by Huawei “anywhere in the world” is now a violation of U.S. export controls.