The Biden administration has expanded its weaponization of semiconductor exports, targeting the Middle East as a new location for control. Nvidia, a leading semiconductor company, disclosed in its second-quarter report that the US government notified them of the need for additional permission to sell certain products to customers in the Middle East and other regions. This move comes as the US aims to curb China's influence in the region, suspecting that semiconductors sent to the Middle East could end up in China. Additionally, the Biden administration's tough stance on Saudi Arabia, particularly in relation to oil prices, may have influenced this sudden regulation.
The US government's control over semiconductor exports is not new. Last year, Nvidia was banned from exporting its semiconductors to China due to concerns over national security. However, the specific Middle Eastern countries that require export approval have not been specified. It is reported that Nvidia's second-quarter sales primarily came from the US, China, and Taiwan, with other countries accounting for 13.9% of total sales. The proportion from the Middle East remains undisclosed.
China's close ties with the Middle East, particularly Saudi Arabia, may have prompted the Biden administration to target this region. China and Saudi Arabia signed a partnership to cooperate in the AI field, and prominent Chinese researchers are based in Saudi Arabia's leading research institution, King Abdullah University of Science and Technology. It is believed that Saudi Arabia has purchased thousands of Nvidia's high-performance AI chips through this collaboration. Furthermore, the Biden administration's concerns over Saudi Arabia's refusal to increase oil production, leading to rising oil prices in the US, could have contributed to the decision to tighten semiconductor controls against the Middle East.