US-China 'tech war': AI sparks first battle in Middle East
Cathrin Schaer
The
US has restricted exports of some computer chips to the Middle East, to
stop AI-enabling chips from getting to China. But there's no
information on which countries are affected, or how chips would get to
China.
DW - October 2, 2023
https://www.dw.com/en/us-china-tech-war-ai-sparks-first-battle-in-middle-east/a-66968886
Just over a month ago, a leading US technology firm made a rather mysterious announcement.
Nvidia,
which produces the world's most advanced computer chips — the small
silicon cards needed to run everything from supercomputers to modern
cars and cellphones — said the United States government was restricting
the export of its most advanced chips to "some Middle Eastern
countries."
Nvidia did not say which countries were affected or
why. But for many observers, it was a sign the "tech war" between China
and the US had arrived in the Middle East.
For some time now, the
US has been trying to get ahead of China when it comes to the
development of world-changing artificial intelligence (AI) technology.
In an attempt to slow down Chinese AI progress, a recent tactic has been
to throttle Chinese access to the computer chips or semiconductors
needed for the most advanced artificial intelligence models.
It's
very hard to develop AI without these materials, and they are also
mostly produced by US-based companies, including current world leader
Nvidia.
That is why last year the US Department of Commerce announced it was restricting exports
of advanced chips to China and Russia. This August's announcement
adds another layer to these export restrictions.
Which Middle Eastern countries are affected?
Neither the US government nor Nvidia is saying. There are some likely candidates though.
"My
best guess as to the countries under closest scrutiny are Iran, Saudi
Arabia and UAE," suggested John Calabrese, a professor who teaches US
foreign policy at the American University in Washington and who has
written regularly about China's presence in the Middle East.
"Iran
has demonstrated a high level of 'hacking' proficiency. Saudi Arabia
and UAE have the financial means. Qatar and Israel might also have been
named. In all these cases, there would seem to be a reasonable 'national
security' justification."
The oil-rich Gulf states are some of
the most enthusiastic spenders in the world on AI. Saudi Arabia, the UAE
and Qatar all see the ongoing digital transformation of their economies
as hugely important in diversifying away from exporting oil.
Israel
is another Middle Eastern country making major investments in AI.
Almost all the world's most advanced chipmakers are already working
there. In fact, in 2020, Nvidia bought an Israeli company, Mellanox, and
this subsidiary is now its largest base outside the US.
Why does the US want to control chip exports to the Middle East?
Announcing the export restrictions, the US government said
AI-enabling chips were "technologies that are force multipliers for military modernization and human rights abuses."
"And
the primary concern is that Chinese firms may see Middle Eastern
countries as a means of evading restrictions and acquiring access to
[advanced chips] they can't otherwise buy," said Christopher Miller,
author of the 2022 book, "Chip War: The Fight for the World's Most
Critical Technology."
"The growing presence of Chinese tech
firms like Huawei in Middle Eastern markets is part of what is driving
these concerns," Miller, an associate professor of international history
at Tufts University in the US, told DW.
A 2022 study by the
US-based Center for Security and Emerging Technology, which looked at
where the Chinese military was getting AI-enabling chips, found that
most of the purchases were not made directly but came via
intermediaries, "including both officially licensed distributors and
shell companies."
In June this year, Reuters journalists
reported on the underground trade in advanced chips in China. Chinese
vendors said they often got the chips from companies registered in other
countries, including India, Taiwan and Singapore.
Middle East deepens ties with China
This
sort of leakage might also be a possibility in the Middle East, because
the countries who are investing heavily in AI have also deepened their
ties with China over the past five to 10 years.
Saudi Arabia's
tech and scientific cooperation with China has been getting stronger for
about seven years, researchers at the Washington-based Carnegie
Endowment for International Peace wrote in an August 2023 study
A
significant number of students and teachers at the King Abdullah
University of Science and Technology (KAUST) are Chinese. Cooperation
between KAUST and various mainland China research organizations has
grown because of the personal links formed there, the Carnegie study
noted.
KAUST is supposed to get 3,000 of Nvidia's advanced H100 chips by the end of this year.
The
UAE is in a similar position with AI. It established a Ministry of
Artificial Intelligence in 2017 and already has its own advanced AI
model called Falcon. At the same time, the Emiratis have acquired
something of an untrustworthy reputation. In early September, officials
from the European Union, US and UK visited the country to try to
discourage the Gulf state from sending sanctioned goods to Russia. This
apparently includes AI-enabling chips.
"None of this is to say
that the US thinks the UAE and Saudi Arabia will intentionally deliver
such technology to China and Russia," Mohammed Soliman, director of the
strategic technologies and cybersecurity program at the Washington-based
Middle East Institute, told DW. The US is an important partner for both
countries and they wouldn't want to provoke tensions, he argued.
"US
officials are probably more worried that Nvidia chips are more exposed
to espionage, reverse-engineering [when products are deconstructed to
extract information — Editor's note] or unintentional transfer to Russia
or China, given the latter two countries' elevated presence in Gulf
nations," he suggested.
Israel's Chinese connections growing
Israel
has also deepened its ties with China. Huawei and Xiaomi both have
research centers there, and Chinese investors have funded venture
capital firms that invest in local chip-makers.
In the recent
past, US tech companies like Intel appear to have used their Israeli
bases as a workaround to be able to keep exporting chips to China, Danit
Gal, a researcher focusing on technology, wrote in a 2019 paper
for the US-based Council on Foreign Relations.
"China's
demand for alternative commercial technology trade partners in light of
tightening American trade restrictions is an unexpected economic boon
to Israel," she argued. But it can't go on forever, Gal noted: "The
importance of chips for technological advancement and military use means
Israel's position […] is bound to attract Washington's attention."
Israel
might have to balance its Chinese investors with its American ally's
needs more carefully, but Soliman of the Middle East Institute doesn't
believe the newly announced export restrictions will apply to that
country.
"Israel does have closer relations with China and Russia
than the US would like," he said, "[but] Israel and the US still
consider each other extremely close allies, with the US sharing some of
its most advanced and sensitive defense tech with Israel."
Having
said that, the export restrictions on chips have probably already
impacted Nvidia in Israel. US export rules like those announced also
apply to products made either wholly or partially as the result of US
technology — that is, it doesn't matter if the Nvidia chips are made in
Israel or the US, the same rules apply. Reports suggest China was
already a major client of Nvidia Israel.
How political is the export ban?
Human
rights may well play a role, said Owen Daniels, a fellow at the Center
for Security and Emerging Technology. "Democratic AI" is important to
the US and its allies, he noted, and there are fears about AI being used
for repression by authoritarian states.
However, neither Daniels
nor other experts DW spoke with for this story thought the export
limits were a way to put political pressure on Middle Eastern countries
around the sorts of larger deals currently being negotiated, like the
Saudi-US defense pact or Saudi-Israel normalization.
"Rather, we
might think of these controls as sending a message to Gulf partners
about the seriousness with which the US regards tech competition with
China," Daniels told DW. "And it will be important to track the
long-term impacts of these controls on relations between democracies and
autocracies around emerging technology," he added.
AI could well become a new source of friction between democratic and autocratic states, he concluded.