Key Takeaways
- President Xi Jinping’s three‑day visit to Egypt marked his first Middle‑East trip in four years and highlighted the 70‑year anniversary of Sino‑Egyptian diplomatic ties.
- Egypt is being courted as a strategic battleground in the US‑China artificial‑intelligence (AI) race, with Huawei bidding to build AI data centres while the United States prepares a competing offer involving Nvidia, AMD and Microsoft.
- The proposed Huawei deal would export 1,408 Ascend 950 processors (plus 600 additional chips) for two computing clusters, representing the first known export of Huawei’s Ascend AI processors.
- Egypt’s geographic position—controlling the Suez Canal and sitting at the crossroads of Africa, the Middle East, Europe and Asia—makes it an attractive hub for Chinese logistics and manufacturing, already evidenced by over $20 billion in non‑petroleum trade and a growing Belt‑and‑Road industrial zone.
- Critics warn that the water‑ and power‑intensive nature of AI data centres could exacerbate Egypt’s severe water scarcity (per‑capita share < 500 m³/year) and air‑pollution problems, with limited long‑term economic benefit for the local population.
- Human‑rights advocates and analysts argue that while China may enjoy a cost advantage and existing telecom foothold in Egypt, the ultimate winner of the data‑centre contract will gain significant political and economic leverage over a key US ally that receives $1.3 billion annually in American military aid.
Xi Jinping’s Historic Visit to Egypt
Chinese President Xi Jinping arrived in Egypt for a three‑day state visit that coincided with the 70th anniversary of diplomatic relations between Beijing and Cairo. The trip was notable as Xi’s first journey to the Middle East in four years and his first to Egypt in a decade. Observers noted that the visit underscored Egypt’s delicate balancing act between its deep economic ties with China and its longstanding defence partnership with the United States, which supplies roughly $1.3 billion in military aid each year.
The AI Data‑Centre Tug‑of‑War
During the visit, Chinese tech giant Huawei submitted a tender to construct Egypt’s AI data centres, proposing to supply “1,408 Ascend 950 processors for AI model training, plus 600 Ascend 950 or older 910B chips” for two computing clusters. Huawei also outlined a 12‑month build timeline, and if successful, the deal would mark the first known export of its Ascend AI processors. The infrastructure would host chips intended for military, surveillance and public‑sector operations, according to documents reviewed by Bloomberg.
Washington’s Counteroffer
In response, the US State Department is reportedly assembling a counteroffer to Huawei’s bid, enlisting companies such as Nvidia, Advanced Micro Devices Inc., and Microsoft Corp. An anonymous source told Bloomberg that the United States aims to “pull together an offer to counter Huawei’s AI chip bid.” The competition reflects a broader global contest: while American firms poured $285.9 billion into private AI investment in 2025, China’s investment stood at $12.4 billion, according to the 2026 AI Index Report from Stanford University.
Why Egypt? Strategic Geography and Economic Ties
Analysts say Egypt’s location makes it a prize in the AI race. The country controls the Suez Canal, a vital maritime chokepoint that connects the Mediterranean to the Red Sea and serves as a crossroads of Africa, the Middle East, Europe and Asia. Recent regional tensions—including the six‑month US‑Israel war on Iran and restrictions on the Strait of Hormuz—have heightened the canal’s value as an alternative shipping route that bypasses both the Hormuz and Bab al‑Mandeb straits.
Economically, China is Egypt’s largest trading partner in non‑petroleum goods, with bilateral trade nearing $20.7 billion by the end of 2025. In the first half of 2026 alone, Egypt imported $10 billion of Chinese goods, a 14 % increase year‑on‑year. Since the 2014 strategic partnership agreement signed by President Abdel Fattah el‑Sisi in Beijing, Chinese firms have invested billions in Egyptian infrastructure, including container ports, green‑hydrogen projects, and factories producing iron pipes, car tyres and satellites. The China‑Egypt Suez Economic and Trade Cooperation Zone, a Belt‑and‑Road initiative, now hosts over 200 companies and has generated more than 10,000 direct jobs.
Environmental and Social Concerns
Despite the economic allure, experts warn that AI data centres are notoriously water‑ and power‑intensive due to the cooling required for high‑performance processors. Egypt already faces severe water scarcity; its per‑capita water share has fallen below 500 cubic metres per year—under half the UN’s water‑poverty threshold. The capital, Cairo, ranks among the world’s most polluted cities, raising fears that an AI facility could worsen both water stress and air quality.
Political analyst Maged Mandour told Al Jazeera that the government would likely allocate the necessary water and energy to the project, potentially depriving other regions of essential resources. He characterized the deal as “an export deal of AI technologies” that would not necessarily translate into broad economic benefits for Egyptians, adding that “it’s unlikely to lead to sustained employment … maybe it would create some jobs, but it’s not something that would be economically transformative long‑term in a large country like Egypt.”
Human‑Rights Perspective on the Data‑Centre Contest
Mohamed Ramadan, a human‑rights advocate with the Egyptian Initiative for Personal Rights (EIPR), emphasized that the data‑centre competition is fundamentally about control over global data flows. He told Al Jazeera, “The US and China are globally competing over data centres… The question of data centres is a very significant geopolitical one… This competition primarily revolves around data and the ability of both nations to integrate data from different regions worldwide, which is essentially a battle over the future in some way.” Ramadan added that China may hold an advantage in Egypt because Huawei has been operating there for years, supplying telecom equipment under numerous government agreements, and Chinese firms often offer lower costs than their American counterparts.
Who Stands to Gain?
If Huawei secures the contract, China would deepen its foothold in a strategically located African nation while showcasing its AI hardware on the world stage. A US‑led victory, meanwhile, would reinforce Washington’s influence over a key defence partner and potentially limit Beijing’s access to Egyptian data infrastructure. Either outcome promises to strengthen the winner’s political and economic ties with Egypt, a nation that remains a major recipient of US military aid yet is increasingly intertwined with Chinese trade and investment.
Ultimately, the AI data‑centre bid encapsulates the broader tug‑of‑war between Washington and Beijing for technological supremacy, with Egypt’s geography, resources, and existing partnerships making it a pivotal, albeit contested, arena in that struggle.
https://www.aljazeera.com/news/2026/9/4/as-the-china-us-ai-race-reaches-cairo-egypt-faces-a-strategic-decision