US Security Concerns Delay Multi-Billion AI Data Centre Deal

Post by : Rinkal Joshi

Photos:Reuters

Concerns Over Security Threaten Multi-Billion-Dollar AI Data Centre Deal in UAE

A major deal to build a multi-billion-dollar AI data centre hub in the United Arab Emirates (UAE) is facing challenges due to security concerns raised by US officials. The project, which involves advanced Nvidia chips and is set to be located at the Stargate UAE campus, has attracted attention from both US political leaders and security agencies.

The ambitious project is being led by a consortium that includes US technology giants like OpenAI, Oracle, Nvidia, Cisco, and SoftBank Group. The UAE's G42 conglomerate is also involved, with the goal of creating a gigawatt AI cluster in Abu Dhabi. The first phase of the project is expected to go live in 2026, with 200 megawatts of power, but it faces scrutiny over its ties to China.

The Stargate project, which covers a 10-square-mile area, was first publicly endorsed by former US President Donald Trump during his visit to the UAE in 2025. However, according to reports from Reuters, US officials remain cautious about the UAE’s relationships with China and its reliability as a strategic partner, similar to concerns raised during both Trump’s first term and the Biden administration.

US Concerns Over China-Ties and Technology Security
US officials have raised concerns about the potential risks associated with the UAE’s ongoing ties to China, particularly regarding the possible transfer of sensitive US technology to foreign adversaries. This worry is not new, as the UAE, along with other Gulf countries, has faced objections from previous US administrations about deploying Chinese technology, including Huawei’s 5G equipment.

The security concerns revolve around the export of Nvidia’s cutting-edge chips to the UAE, which could be used in the data centre hub. There is currently no clear agreement on how the US will manage the export conditions for these chips, and US officials are unsure how to enforce any restrictions on the technology.

While the Trump administration has shown support for the project, members of both US political parties are expressing unease about the UAE’s relationship with China. The project’s future is uncertain as both the US and UAE governments continue negotiations, and it remains unclear how these security conditions will be addressed.

The Stargate Project’s Potential and Challenges
The Stargate UAE campus is seen as a landmark venture in the Middle East, and its scale is unmatched. Initially, the project is valued at $100 billion, but it is expected to grow to $500 billion over the next four years, making it one of the largest AI and data infrastructure projects in the world. If completed, it could play a pivotal role in shaping the future of AI technology and data storage, both in the UAE and globally.

However, the involvement of US technology firms in the project is complicated by the UAE's ongoing cooperation with China. US officials are particularly concerned about the UAE's ability to prevent sensitive US technology from falling into the hands of foreign adversaries, especially given the UAE's history of working with Chinese firms like Huawei.

Despite these concerns, the Stargate project has been championed by US President Donald Trump, who unveiled the joint venture in January 2025. The project’s backers hope to foster deeper cooperation between the US and UAE, as well as advance the development of AI infrastructure in the region.

Timeline and Next Steps
The deal to finalize the Stargate AI data centre hub is still under negotiation, with no clear timeline for when the final decision will be made. UAE officials are aware that they may need to accept certain controls on the US technology being used in the project. However, there is also the possibility that they could request amendments to these controls, which may further delay the approval process.

Both the UAE and the US will need to reach a compromise that ensures security concerns are addressed while still allowing the project to move forward. The negotiations continue, and while progress is being made, the outcome remains uncertain.

Conclusion
The Stargate project represents a major step in advancing AI and data infrastructure in the UAE, with the potential to make a significant impact on the region’s technological landscape. However, security concerns related to the involvement of Chinese companies and the export of US technology have complicated the deal, making it clear that both governments will need to address these issues before finalizing the agreement.

The project’s success will depend not only on resolving security concerns but also on maintaining a balance between technological progress and geopolitical interests. As negotiations continue, all eyes are on the UAE and the US to see how they navigate this complex and high-stakes deal.

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