(Bloomberg) -- The United Arab Emirates and France have agreed to collaborate on artificial intelligence development as both countries work to become regional hubs for the technology after Abu Dhabi secured a landmark investment deal with US software giant Microsoft Corp.

France and the UAE committed to invest together on talent, data centers, including for quantum computing, and semiconductors, French Finance and Economy Minister Bruno Le Maire said at an event in Abu Dhabi on Tuesday. They’ll also work to maximize practical uses of the technology, he said.

The agreement between the French finance and economy ministry and Abu Dhabi’s Artificial Intelligence and Advanced Technology Council was signed by Le Maire and Khaldoon Al Mubarak, who is a member of the council.

AI “has the potential to significantly improve many sectors, creating more opportunities for UAE-French cooperation,” including in health care, clean energy and climate research, said Al Mubarak, who is also chief executive officer of Abu Dhabi sovereign investment fund Mubadala Investment Co..

The development of AI is increasingly political. Governments are working to promote local startups while external investment often reinforces diplomatic ties. For example, UAE-backed AI startup G42 won a $1.5 billion investment from Microsoft  — after it agreed to cut ties with China to assuage US government concerns. 

Read More: G42 Made Secret Pact to Divest From China Before Microsoft Deal

The UAE and France aim to build on existing projects such as the chip factory near Grenoble. The French facility is being built by Franco-Italian company STMicroelectronics and GlobalFoundries, a US-based semiconductor manufacturer backed by Mubadala.

The tie-up with France gives the UAE access to a growing European hub for AI startups. France was the second most popular investment destination for tech investors in Europe after the UK, with companies raising $8 billion in 2023, according to data compiled by venture capital firm Atomico.

H, a French AI startup from former Google DeepMind developers formed this year, also announced Tuesday that it had raised a $220 million from investors including Bernard Arnault and Eric Schmidt along with a slew of investors and tech companies. That follows the more than $500 million that Parisian AI startup Mistral has raised since being formed early last year. 

Read More: Arnault, Amazon Join $220 Million Round Into French AI Startup H

Microsoft announced plans last week to invest €4 billion ($4.3 billion) building cloud and AI infrastructure in France.

--With assistance from Mark Bergen.

(Corrects UAE signatory of deal in third paragraph in story published Tuesday)

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