Huawei pitches Egypt on AI data centers, prompting US counteroffer

Huawei Technologies has proposed building AI data centers in Egypt for military, surveillance, and public-sector use, according to documents reviewed by Bloomberg News — a move that has prompted the Trump administration to scramble a counteroffer involving American chip and cloud giants.bloomberg

A First for Chinese AI Chip Exports

China's top competitor to Nvidia ↗ 2.78% responded to a tender from Cairo with a proposal to export 1,408 of its top-end Ascend 950-series chips for an AI training cloud, plus 600 additional chips — either the same model or the earlier 910B — for two inference clusters, according to people familiar with the matter. Huawei laid out a 12-month plan to build the infrastructure. If completed, the project could represent the first known export of Huawei's Ascend accelerators after more than a year of attempts. Bloomberg has previously reported that the company did not appear to have completed any Ascend exports.freemalaysiatoday+1

When the Trump administration learned of the pitch, the State Department reached out to Nvidia, Advanced Micro Devices ↗ 11.04%, and Microsoft ↘ 0.99% about assembling a US consortium to counter the bid, according to people who requested anonymity to discuss confidential conversations. "Egypt is one of dozens of countries with whom we are speaking about US technology leadership on artificial intelligence," a State Department spokesperson said. "American AI benefits the world".bloomberg+1

Surveillance Ties and Geopolitical Stakes

Huawei's proposal involves a partnership with iFlytek, the Chinese surveillance firm that, along with Huawei, has been on a US blacklist since 2019. Their joint offering includes vehicle and individual recognition based on a national population database and broader "situation awareness" packaged into a "one screen panoramic view of the city." One slide from the 102-page presentation contained the insignia of China's Ministry of Public Security.theedgemarkets+1

The process may be the first time the US and China have directly competed for the same government AI data center tender. Egypt, a nation of more than 100 million people whose second national AI strategy targets 7.7% of GDP by 2030, has not historically been a priority market for American AI infrastructure companies.theedgemarkets

The Broader Contest

The 2,008 chips on offer represent a modest amount of computing power — roughly equivalent to a few hundred top-tier Nvidia processors. But the bid echoes the playbook that made Huawei the world's dominant telecommunications-equipment provider: small initial shipments to gain footholds in nontraditional markets. Huawei is now offering Egypt its most advanced processors, more powerful than the 910C model it had previously pitched to Persian Gulf and Southeast Asian nations. The company has also been exploring Ascend 950 deployments in South Korea and Latin America.tomshardware+3

Washington's leverage rests partly on export controls — AI chip shipments to Egypt have required US permission since 2023 — and partly on extraterritorial warnings that using certain Huawei accelerators without approval could carry legal penalties. That approach proved effective in Malaysia, which last year distanced itself from a Huawei-powered national AI system after White House pressure.freemalaysiatoday+1