As the China-US AI race reaches Cairo, Egypt faces a strategic decision

The trip caused debate among geopolitical observers over Egypt’s diplomatic balancing act between China, one of its largest economic partners, and the United States, a major defence and strategic partner.

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But Egypt also finds itself in another tightrope walk between the two superpowers: it is emerging as a potential battleground in the US-China artificial intelligence race.

Xi’s visit came at a time when Chinese tech giant Huawei has submitted a tender to build Egypt’s AI data centres. The US, meanwhile, is reportedly pulling together an offer to counter Huawei’s bid.

Whoever wins the contract to build the data centres will also gain an opportunity to strengthen their political and economic ties with Egypt.

So what does all of this mean for Egypt’s relations with the US and China, and who stands to benefit from AI data centres in Egypt.

Is China using Egypt to get ahead in the AI race against the US.

Huawei has offered to supply “1,408 Ascend 950 processors for AI model training, plus 600 Ascend 950 or older 910B chips” to build two computing clusters.

The company proposed a 12-month build timeline, and if the project goes through, the deal would mark the first known export of Huawei’s Ascend AI processors, according to documents reviewed by Bloomberg.

The infrastructure that would house the AI chips would be used for military, surveillance and other public-sector operations, the news agency reported.

According to anonymous sources quoted by Bloomberg, the US State Department is working on a counteroffer to Huawei’s AI chip bid through companies including Nvidia, Advanced Micro Devices Inc, and Microsoft Corp.

Currently, China and the United States are leading globally when it comes to AI development and investment. The gap between the world’s two biggest economies is narrowing fast, though.

Al Jazeera contacted Huawei for comment but received no response.

Ramadan, however, argued that China might have an advantage over the US in Egypt as “Huawei has been in Egypt for years” having signed numerous agreements with the Egyptian government for the supply of telecom equipment.

He also added that the “Chinese often likely have the advantage of being cheaper compared to American companies.”.

Environmentally, Egypt sits at a disadvantage when it comes to water scarcity and air pollution. The country’s per capita water share has fallen below 500 cubic metres a year, under half the UN’s water poverty threshold, according to Egyptian government data.

Data centres are notoriously water and power-hungry because high processing power requires significant cooling. Egypt’s capital is also ranked among the world’s most polluted cities, raising the question of whether an AI data centre could make the situation more severe.

Speaking to Al Jazeera, Egyptian political analyst Maged Mandour said that despite water scarcity being a prominent issue, the government will likely supply the project “the water that it requires, and the energy that it needs while depriving other parts of the country of the needed resources”.

He added that the deal would be “an export deal of AI technologies” and would not necessarily benefit the Egyptian economy.

Why did China choose Egypt for an AI data centre.

Chinese investment has surged since Egyptian President Abdel Fattah el-Sisi signed a strategic partnership agreement in Beijing in 2014. Since then, Chinese firms have poured billions into different Egyptian projects ranging from container ports, green hydrogen and factories producing iron pipes, car tyres and satellites.

According to figures cited by China’s Xinhua news agency, the China-Egypt Suez Economic and Trade Cooperation Zone attracted more than 200 companies and created more than 10,000 direct jobs by the end of June.

That zone is a major international industrial and manufacturing hub located along Egypt’s Red Sea coast and was established as a joint project between China and Egypt as part of China’s Belt and Road Initiative.

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