US-UAE multi-billion dollar AI project Stargate faces hurdles – report

A multi-billion dollar deal to build data centers for AI, Stargate UAE, using U.S. technology is far from being completed due to continuous concerns related to security, Reuters reported, citing people with knowledge of the matter.

Nvidia (NASDAQ:NVDA), Oracle (NYSE:ORCL), OpenAI, Cisco Systems (NASDAQ:CSCO), SoftBank Group (OTCPK:SFTBY) (OTCPK:SFTBF) and United Arab Emirates-based G42 are collaborating to build Stargate UAE, plans for which were announced last month following U.S. President Donald Trump’s visit to the country during his trip to the Middle East.

Stargate UAE, a 1-gigawatt compute cluster, will be built by G42 and operated by OpenAI and Oracle. The first 200-megawatt AI cluster is expected to go live in 2026. The AI campus in Abu Dhabi is supposed to eventually host 5 gigawatts worth of data centers.

However, U.S. officials have yet to decide the security conditions to export the advanced chips or how the agreement with the UAE will be enforced, leaving the deal far from resolved, the report added.

G42 had said previously that the new endeavor builds on a new framework by the U.S. and UAE governments, known as the “U.S.-UAE AI Acceleration Partnership.” This is designed to bolster cooperation and collaboration on AI and advanced technologies, developing safe, secure, and responsible AI that delivers long-term benefits for humanity.

OpenAI and G42 are both backed by Microsoft (NASDAQ:MSFT).

However, the U.S. officials remain cautious about the UAE’s close relationship with China. The report added that the concerns are consistent with those raised during both the Biden administration and Trump’s first term, mainly around UAE’s reliability as a strategic partner.

The U.S. Department of Commerce, Nvidia, OpenAI, G42, Microsoft, Oracle and SoftBank did not immediately respond to a request for comment from Seeking Alpha.

The sources did not disclose if new evidence had surfaced, but said that existing concerns remain unresolved. During Trump’s first term, the UAE and other Gulf states moved ahead with deploying Chinese company Huawei Technologies 5G service despite U.S. objections, the report noted.

In addition, others in the administration doubt if UAE, despite its intentions, can prevent U.S. technology from reaching American adversaries, according to the report.

The U.S. administration had no clear timeline for finalizing the deal. Abu Dhabi would need to accept yet-to-be-defined U.S. curbs on the technology, but it could also ask for amendments that could delay final approval, the report noted.

The U.S. controls could likely ban the use of Chinese technology and restrict the employment of Chinese nationals at the AI campus.

The Trump administration remains committed to concluding the deal, but there is opposition among Republicans and Democrats over concerns regarding the gulf country’s relationship with China, the report added.

Last week it was reported that, Elon Musk threatened to scuttle the deal with the UAE because his own AI company, xAI, wasn’t included in discussions.