Exclusive: Microsoft’s UAE deal could transfer key U.S. chips and AI technology abroad

Microsoft (MSFT.O), opens new tab President Brad Smith said the tech company’s high profile deal with the United Arab Emirates-backed AI firm G42 could eventually involve the transfer of sophisticated chips and tools - a move that a senior Republican congressman warned could have national security implications.

In an interview with Reuters this week, Smith said the sales accord, many details of which are being reported here for the first time, could progress to a second phase that entails the export of crucial components of AI technology such as model weights, a crown jewel of AI systems that determine how powerful they are. Smith said there is no firm timeline for the second phase.

To move forward, the deal would require the approval of the U.S. Department of Commerce. Microsoft executives said the agreement has safeguards to protect Microsoft’s technology and prevent it from being used by Chinese entities to train AI systems.

But those measures have not been made public, and some U.S. lawmakers question whether they are adequate.