Can China still access U.S. technology after Trump's GCC Deals?
This paper provides an overview of the recent developments and outlines what has changed with the new BIS regulations. It explores whether or not these new regulations will actually assuage U.S. concerns over Chinese diversion of U.S. sensitive technologies or provide sufficient and enforcable guardrailes to new GCC entities gaining chip access.
Last week, Trump announced over $500 billion in new deals between Saudi Arabia and U.S. companies. AI and advanced microchips featured heavily in the mix. Notably, U.S. tech companies like Nvidia and AMD have partnered with Saudi Arabia's newly established AI firm, Humain, to supply advanced AI chips and develop significant AI infrastructure projects.
Days later, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has issued a regulatory update that will have lasting implications for the global semiconductor and advanced technology trade. While the main thrust of the rule continues to target Chinese companies—especially in AI and semiconductor sectors—the update also signals a parallel effort: to create more predictable pathways for U.S. tech engagement with Gulf Cooperation Council (GCC) states.
What Changed?
The most visible part of the BIS update is an expansion of export controls—particularly under the Foreign Direct Product Rule (FDPR)—which further restricts China’s access to U.S.-origin technologies, especially in AI training and chip production. But more subtly, BIS has also moved to clarify licensing procedures and enforcement expectations for U.S. firms working with foreign partners not targeted by these controls.
This regulatory clarification removes ambiguity around U.S. tech transfers and joint ventures in countries like Saudi Arabia and the UAE—jurisdictions previously caught between their growing demand for advanced technologies and the risk-averse posture of U.S. firms wary of export control violations.
Why Now?
Three converging dynamics explain this shift:
U.S. Strategic Outreach to the Gulf: President Trump’s recent visit to Riyadh secured a $600 billion investment commitment, with substantial focus on AI, cloud infrastructure, and chip manufacturing. U.S. regulators are under pressure to facilitate these deals by providing the legal and compliance frameworks that U.S. firms need to operate securely in the region.
GCC Tech Ambitions: Saudi Arabia and the UAE, in particular, are investing heavily in semiconductors, large language models, and expansive national innovation and AI strategies. They hope to make these a reality through partnerships with top-tier U.S. and Asian technology companies and building out their domestic capacity to manufacture, deploy, and export tech solutions.
China’s Deepening Tech Ties with the Middle East: Huawei, ZTE, and Chinese cloud and AI companies have made major inroads in the GCC. The new BIS measures are part of a broader U.S. strategy to counterbalance this by incentivizing U.S.-aligned technology ecosystems and preventing the proliferation Chinese-manufactured chips.
What This Means for Industry
For U.S. technology exporters, the updated BIS guidance offers greater clarity and legal cover when pursuing partnerships in the Gulf. This opens the door for:
-Joint semiconductor manufacturing initiatives with Gulf sovereign-backed funds;
-Licensing of U.S. AI models and tools to regional institutions like the Technology Innovation Institute (UAE) or KAUST (Saudi Arabia);
-Strategic investments from Gulf actors into U.S.-based chip supply chains and infrastructure projects.
For Gulf countries, this is a major development they have been seeking after years of restrictive compliance measures and export restrictions, which have curbed Gulf AI ambitions. This shift enables deeper cooperation with U.S. firms and offers access to the cutting-edge technologies GCC companies have long sought that may have previously been blocked or delayed due to export control risk or exposure to Chinese investments and diversion risks. It also positions the GCC as a growing hub for high-tech production and innovation—at the crossroads of U.S. and Asian supply chains.
Going Forward
While the updated BIS rule does not explicitly designate “preferred” partners, it clearly differentiates between countries subject to heightened restrictions (e.g. China) and those with closer alignment to U.S. security and economic policy (e.g. Saudi Arabia, UAE). This difference will shape licensing decisions and corporate strategies going forward.
However, this alignment is conditional. Any Gulf-based entity that re-exports sensitive U.S. technology to China or sanctioned actors could be subject to penalties or further restrictions. However, the underlying mistrust of lawmakers in the U.S. is still present—access comes with risk and requires deeper accountability.
Implications for China
This shift may add friction to China’s efforts to expand its tech footprint in the Middle East. While many GCC countries have maintained strong commercial ties with Beijing, the United States is increasingly enforcing clear lines around technology ecosystems.
Most notably, on May 13, 2025, the Bureau of Industry and Security (BIS) issued new guidance under General Prohibition 10 (GP10) of the Export Administration Regulations, warning that the use of Huawei’s Ascend AI chips (models 910B, 910C, and 910D)—anywhere in the world—likely violates U.S. export controls. U.S. officials argue these chips were developed and manufactured using U.S.-origin technology without the required licenses. As a result, any foreign entity, including Middle East entities, found to be using or integrating these chips may be subject to penalties including fines, loss of export privileges, or placement on BIS’s Denied Persons List.
At the same time, the U.S. government is also considering placing additional Chinese semiconductor firms—ChangXin Memory Technologies (CXMT), SMIC subsidiaries, and Yangtze Memory Technologies Co. (YMTC)—on the Entity List, which would further restrict their access to U.S. technologies.
However, these moves, while signaling intent, do not eliminate the underlying concern of many U.S. lawmakers that China may continue to access U.S. technology through indirect channels in the GCC. Despite the legal pressure BIS is applying—especially by targeting end-users of Huawei chips—there is no new enforcement mechanism or monitoring architecture to prevent Chinese firms from partnering with or routing technologies through Gulf-based companies.
Indeed, this tension is reflected in ongoing congressional debates over how to insulate U.S. chips and AI infrastructure from Chinese access. Lawmakers on both sides of the aisle have expressed concern that expanding U.S. tech exports to Gulf countries—without formal guarantees or enforceable restrictions—could open new backchannels for Chinese firms to obtain sensitive technologies. As of now, the updated BIS rules offer streamlined export pathways for GCC countries, but they do not require reciprocal commitments from Gulf governments to restrict Chinese access or to adopt U.S.-aligned export controls.
Put simply, the U.S. has expanded the scope of who is legally accountable for misuse of controlled technologies but is relying on incentives and voluntary compliance from Gulf partners, rather than imposing binding safeguards. As a result, diversion risk remains, particularly in sectors involving dual-use technologies.
Congressional Pushback
Trump’s commitments to the Gulf have triggered bipartisan concern in Congress over whether enough is being done to prevent Chinese diversion. Lawmakers have questioned whether regulatory clarity alone is sufficient to guard against U.S. technology leaking through partners with deepening commercial ties to Beijing. Though Trump lifted the AI diffusion rules, Congress may be looking at extending fresh controls of their own.
On May 9, 2025, Senator Tom Cotton (R-AR) introduced the Chip Security Act, which would require AI chip manufacturers to embed location-tracking technologies in export-bound chips and report diversion risks to BIS. Cotton warned that the U.S. must “leverage all tools in our toolbox to secure the semiconductor supply chain and restrict the CCP’s exploitation of U.S. technology.”
A companion bill was introduced in the House on May 15, 2025 by Representatives Bill Huizenga (R-MI) and Bill Foster (D-IL), with bipartisan co-sponsorship from Rick Crawford (R-AR), Raja Krishnamoorthi (D-IL), Josh Gottheimer (D-NJ), Darin LaHood (R-IL), and Ted Lieu (D-CA). Huizenga argued that “these advanced AI chips must not be shipped to bad actors who would use them for nefarious purposes,” while Crawford, chair of the House Intelligence Committee, emphasized that the U.S. must protect its innovation base from exploitation.
Representative Raja Krishnamoorthi, ranking member of the House Select Committee on the Chinese Communist Party, directly criticized the administration’s decision to ease AI export rules to Saudi Arabia and the UAE, calling it a “horrible idea.” He warned that without “ironclad commitments” from Gulf governments, the U.S. risks indirectly empowering its strategic competitors.
Lawmakers from both parties have said that without enforceable restrictions and reciprocal export controls, expanded tech access to the Gulf risks creating a backchannel to China. The legislation signals that future export policy continue will face rigorous congressional scrutiny, regardless of the Gulf’s strategic alignment with Washington.
For Further Reading
U.S. Department of Commerce BIS Guidance on Huawei Ascend Chips (May 13, 2025)
https://www.bis.gov/media/documents/general-prohibition-10-guidance-may-13-2025.pdfSenator Tom Cotton Press Release on the Chip Security Act (May 9, 2025)
https://www.cotton.senate.gov/news/press-releases/cotton-introduces-bill-to-prevent-diversion-of-advanced-chips-to-americas-adversaries-and-protect-us-product-integrityRep. Bill Huizenga Press Statement on Bipartisan House Introduction (May 15, 2025)
https://huizenga.house.gov/news/documentsingle.aspx?DocumentID=404076Reuters Coverage: “U.S. Lawmakers Introduce Bill to Address AI Chip Smuggling” (May 15, 2025)
https://www.reuters.com/world/us/us-lawmakers-introduce-bill-address-ai-chip-smuggling-2025-05-15South China Morning Post: Raja Krishnamoorthi Criticism of AI Export Rollback (May 13, 2025)
https://www.scmp.com/news/china/science/article/3310730/senior-us-democrat-slams-reversal-ai-rule-horrible-idea-helping-chinaAxios: “Congress Pushes Back on Trump’s Gulf AI Chip Deals” (May 16, 2025)
https://www.axios.com/2025/05/16/trump-ai-deals-gulf-chips-china-trade-policy