How Gulf Sheikhs played their Trump cards into a massive AI chip deal

But an agreement to give the U.A.E. coveted access to millions of the most advanced chips from Nvidia shows that the tiny, oil-rich Gulf monarchy knows how to play a clever economic game in the age of Trump.

The chip deal, confirmed by people familiar with the matter, puts the Persian Gulf nation in rarefied company, competing with the most powerful economies in the world at the cutting edge of advances in artificial intelligence.

It is the linchpin of a pact agreed to Thursday during President Trump’s swing through the Middle East that involves building what would be the world’s biggest cluster of data centers, a massive AI processing hub, larger than any announced deal of its kind.

Emirati officials persuaded Trump’s team to greenlight the deal despite worries from officials within the administration that the technology transfer could end up as a backdoor for America’s most important computing power to end up in China.

The U.A.E. and Saudi Arabia—which struck a smaller pact with Nvidia and Advanced Micro Devices earlier in the week—have tried to assure U.S. officials they will implement safeguards to protect the technology.

Nvidia is a main beneficiary: Shares of the world’s biggest AI company have risen more than 15% this week as prospects for the deal grew. The new purchases could more than offset the hit the company will take from new restrictions on sales directly to China that the Trump administration put in place earlier this year, industry analysts said.

The pact is a coup for the U.A.E.’s ruling family, the culmination of a monthslong charm offensive that featured a Trumpian fusion of headline-grabbing investment numbers, deals with Trump family businesses and new ties with top American tech executives.

The agreement—which both sides called a framework that requires additional details to be sorted out—gave industry executives the impression that there would be few restrictions on sales in countries favored by the administration. That represents a break from the Biden administration, which limited chip access for the U.A.E. and others over concerns that the cutting-edge U.S. technology could be diverted to China, a major trading partner of the country.

“It’s unclear what, if any, guardrails are now in place," said Jimmy Goodrich, senior adviser for technology analysis to Rand. “This is a bonanza for the bottom line of Silicon Valley and Asian tech supply chains" that supply components for the chips and data centers, he said.

The deal was championed by White House AI and crypto czar David Sacks and Commerce Secretary Howard Lutnick, who helped get it through despite the resistance from other administration officials about security, according to people familiar with the matter.

Those pushing the deal believe the U.A.E. agreement is safe from Chinese interference because most of the activity will involve U.S. companies and the agreement includes strong security provisions, officials said.

The U.A.E.’s influence, thanks to its vast petrowealth, has long outstripped its size.

When Trump was elected in November, Emirati officials worried about the fate of a priority project: building a dominant AI sector to bolster its post-oil economy.

Sheikh Tahnoon bin Zayed al Nahyan, the president’s brother and national-security adviser, controls more wealth than almost any single investor in the world, a $1.5 trillion fortune of state and personal money. He had struck a complex deal with the Biden administration last year that tethered the U.A.E. to the U.S. on AI, allowing it a much smaller amount of chips. Some lawmakers fretted given the country’s deep ties to China.

Around the election, Tahnoon posted Instagram photos of the leaders of Apple, Microsoft, Amazon.com and Oracle meeting him in his royal compound, often seated on plush furniture. His deputies hashed out deals for American companies to build massive data centers in the U.A.E.

To Trump, he offered the prospect of a massive U.S. investment pledge. He sat with the president in the White House in March and committed the U.A.E. to $1.4 trillion of investment over 10 years, including data-center investments in the U.S.

Emirati officials made clear it wasn’t a blank check: The U.S. needed to loosen its chip rules and give ground on other measures like foreign investment restrictions, people familiar with the conversations said.

Trump’s family benefited from ties to the U.A.E., too. Before the election, a Tahnoon-run fund joined with Qatar to pump an additional $1.5 billion into Trump’s son-in-law Jared Kushner’s first private-equity fund.

Earlier this month, another fund helmed by Tahnoon, MGX, agreed to use $2 billion of so-called stablecoin cryptocurrency from the Trump family’s World Liberty Financial to complete an investment in a crypto exchange. It was a giant boost for World Liberty, giving it the ability to make tens of millions of dollars a year in profit from interest it earns on the money.

Kushner said on a podcast in October that he told his investors they shouldn’t expect benefits in return. A World Liberty spokesman has said the company is proud to have MGX as an investor.

Under the new agreement, the U.A.E. will host data centers with 5 gigawatts of electric-power capacity, over twice as big as a Meta Platforms project in Louisiana that is the size of Manhattan. The U.A.E.’s wealth, energy and land are appealing to companies that struggle to build infrastructure in the U.S. Servers in the U.A.E. could power AI in Europe, India and Africa.

The deal would send 500,000 chips a year to Group 42, a company that has drawn scrutiny from lawmakers for its ties to China and its leadership by Tahnoon, who also serves as the chief of the country’s sophisticated spy operations. (By comparison, a data center operated by Elon Musk’s xAI in Memphis, Tenn., runs on 200,000 chips.)

Most of the chips in the deal would be used in ventures with U.S. firms, and some could be used by G42 directly.

National-security analysts fear that some of the hardware could still eventually make its way to China, which conducted joint military exercises with the U.A.E. last year.

“This is a real vector of Beijing’s influence in the Middle East," said Michael Sobolik, a senior fellow at the Hudson Institute, a conservative think tank.

“If the primary determinant is going to be investment in the U.S.," Sobolik said, “that’s a system that could be easily gamed in ways that come back to harm America."

Write to Eliot Brown at Eliot.Brown@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com