China wants to help Egypt build out a local AI industry. The US isn't happy.

Egypt has emerged as unlikely battleground in the global AI race as China and the US vie for influence in the North African country.

News that Chinese tech giant Huawei had offered to take the lead on developing the country's AI datacentres surfaced just days before President Xi Jinping landed in Cairo for his first state visit in more than a decade.

The company has proposed exporting 1,408 of its most advanced Ascend 950-series chips to train AI models and 600 others for two clusters to run AI models after they're trained, Bloomberg reported on 26 August. It submitted a plan to build the datacentres inside 12 months, according to documents seen by the business news outlet.

The offer marks the first challenge to American AI dominance in the Middle East and if it goes through would be first known incidence of Huawei chips being exported abroad.

US companies have so far focused their efforts on lucrative markets in the Gulf, where the United Arab Emirates, Saudi Arabia and Bahrain have received billions of dollars of investment in large-scale datacentres, cloud infrastructure and AI research institutions.

But news of Huawei's offer appears to have caused concern in the Trump administration, which is reportedly trying to rally American tech firms to consider a rival bid. The State Department is thought to have reached out to Microsoft and chip designers Nvidia and AMD to explore options.

Egypt, a country under-resourced in money and energy for AI development, has until now not been on Washington's radar. That it should now be the focus of conversations in Washington underlines the importance the Trump administration places on preventing Chinese AI from making inroads abroad.

Huawei's bid also hints at the role Beijing sees for AI as it tries to compete with the US in the Middle East and elsewhere. It dovetails with Xi's message this week to Arab capitals reeling from the US-Israeli war on Iran: Reject external interference and build a new security architecture.

Huawei has a longstanding relationship with Egypt, where it has for years worked on advanced technology projects including 5G, battery storage and cloud computing.

But it also trails far behind its American rivals in terms of international reach in AI and semiconductors. US export controls have drastically limited its access to cutting-edge technology, and though it is developing indigenous capabilities of its own, it is yet to challenge properly challenge America's dominance. Sealing the deal with Egypt would lay down a marker that proves that Chinese companies can compete with the America's tech giants.

China is vying for influence in other ways. In July it launched the first international body focused on AI development - World Artificial Intelligence Cooperation Organisation – which attracted signatures from 30 countries, mostly in the developing world. Beijing says the goal of the body is to ensure the development of advanced AI systems is inclusive and safe.

WAICO has been compared in some quarters to the US-led Pax Silica, an international initiative launched by the Trump administration last year to decrease reliance on Chinese supply chains.