Egypt Faces Strategic Crossroads in US-China AI Data Centre Race

Chinese President Xi Jinping’s recent three-day visit to Egypt, coinciding with the 70th anniversary of bilateral relations, has intensified scrutiny over Cairo’s delicate diplomatic balancing act. As the first trip to the Middle East by Xi in four years and the first to Egypt in a decade, the visit underscores Egypt’s growing role as a strategic pivot point in the intensifying artificial intelligence competition between the United States and China.

At the heart of this geopolitical tension is a high-stakes tender for constructing Egypt’s AI data centres. Chinese technology giant Huawei has submitted a proposal to supply computing hardware, prompting the United States to reportedly assemble a counter-offer involving firms such as Nvidia, Advanced Micro Devices, and Microsoft. The winning bidder will not only secure a significant commercial contract but also strengthen its political and economic influence in a nation that receives approximately $1.3bn annually in US military aid while steadily deepening ties with Beijing.

Huawei’s bid, according to documents reviewed by Bloomberg, includes the supply of 1,408 Ascend 950 processors alongside 600 Ascend 950 or older 910B chips. The company proposed a 12-month construction timeline for two computing clusters intended for military, surveillance, and public-sector operations. If approved, the deal would represent the first known export of Huawei’s Ascend AI processors. Huawei declined to comment when contacted by Al Jazeera.

The competition highlights a broader global rivalry. While the US maintains a dominant lead in private AI investment—pouring $285.9bn into the sector in 2025 compared to China’s $12.4bn—the gap is narrowing. Mohamed Ramadan, a human rights advocate with the Egyptian Initiative for Personal Rights, described the dispute as a battle over data integration and future geopolitical influence. He noted that Huawei may hold an advantage due to its long-standing presence in Egypt and lower costs compared to American counterparts.

However, the project raises serious environmental and economic concerns. Egypt faces severe water scarcity, with per capita water availability dropping below 500 cubic metres annually, well under the UN poverty threshold. Data centres are energy- and water-intensive, requiring substantial cooling systems, while Cairo remains one of the world’s most polluted cities. Political analyst Maged Mandour suggested the government would likely prioritize resource allocation for the project at the expense of other regions. He further cautioned that the deal might function primarily as an export of AI technology rather than a catalyst for sustained employment or long-term economic transformation.

China’s interest in Egypt is partly driven by its strategic geography. Controlling the Suez Canal, Egypt sits at the intersection of Africa, the Middle East, Europe, and Asia. Following recent regional conflicts that restricted traffic through the Strait of Hormuz, the Suez Canal has emerged as a critical alternative shipping route. This logistical importance is complemented by robust trade ties; China is Egypt’s largest trading partner for non-petroleum goods, with bilateral trade nearing $20.7bn by the end of 2025. Chinese investment has surged since a strategic partnership was signed in 2014, supporting projects ranging from green hydrogen to manufacturing hubs like the China-Egypt Suez Economic and Trade Cooperation Zone, which reportedly created over 10,000 jobs by mid-2026.