US-UAE multi-billion dollar AI data campus deal far from finalised, sources say

ABU DHABI, June 6 (Reuters) - A multi-billion dollar deal to build one of the world's largest data centre hubs in the United Arab Emirates with U.S. technology is far from being concluded due to persistent concerns around security, sources familiar with the matter told Reuters.

The U.S. and the wealthy Gulf state unveiled the massive artificial intelligence campus project set to contain a cluster of powerful data centres during President Donald Trump's two-day visit to Abu Dhabi last month.

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The planned 10-square-mile (26-sq-km) site is being funded by G42, an Emirati state-linked tech firm that is driving the development of its artificial intelligence industry.

The project, which plans to use advanced Nvidia AI chips, has been promoted by Trump officials as a win in steering Gulf states toward U.S. technology over Chinese alternatives.

But according to five sources briefed on the project, U.S. officials have yet to determine the security conditions to export the advanced chips or how the agreement with the Gulf state will be enforced, leaving the deal far from resolved.

During Trump's visit, Abu Dhabi pledged to align its national security regulations with Washington, including safeguards to prevent the diversion of U.S.-origin technology.

But U.S. officials remain cautious about the UAE's close relationship with China, four of the sources said, noting that the concerns are consistent with those raised during both the Biden administration and Trump's first term, primarily around the Gulf state's reliability as a strategic partner.

The sources did not specify whether new evidence had emerged, but said existing concerns remain unresolved. During Trump’s first term, the UAE and other Gulf states moved forward with deploying Huawei 5G technology despite U.S. objections.

Others in the administration also doubt whether the UAE, despite its intentions, can prevent U.S. technology from reaching Washington’s adversaries, four of the sources said.

A White House spokesperson referred Reuters to the Commerce Department, which did not respond to a request for comment.

Neither did the UAE government.

Four sources said the U.S. administration had no clear timeline for finalising the deal. Abu Dhabi would need to accept yet-to-be-defined U.S. controls on the technology, but it could also request amendments that may delay final approval, they said.

Two sources said U.S. controls would likely prohibit the use of Chinese technology and restrict the employment of Chinese nationals at the site that is being referred to as an AI campus.

The administration remains committed to concluding the deal, four of the sources said, but noted there was opposition among Republicans and Democrats over concerns regarding the UAE's ties with China.

Stargate UAE is scheduled to come online next year with an estimated 100,000 advanced Nvidia chips. The 1-gigawatt project will use Nvidia's Grace Blackwell GB300 systems, currently the most advanced AI server that Nvidia offers.

Although smaller than the U.S. state of Maine, the UAE is a influential Middle Eastern player known for its strategic hedging that has seen it forge close ties with China and Russia.

Last year, under pressure from the Biden administration, G42 ripped out Chinese hardware and sold its Chinese investments.

Nevertheless, major Chinese firms Huawei and Alibaba Cloud remain active in the Gulf state, and an organised AI chip smuggling ring to China has been tracked out of countries including the UAE.

The Gulf state has also become a hub for companies evading sanctions imposed on Russia since 2022 over the war in Ukraine.

The Trump administration has said that American companies would operate the Emirati-built data centres and offer "American-managed" cloud services throughout the region.

The so-called AI campus in Abu Dhabi is supposed to eventually host 5 gigawatts worth of data centres.

Reporting by Alexander Cornwell, additional reporting by Karen Freifeld, Editing by Louise Heavens

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