Nvidia is partnering with Khazna, a UAE-based data center developer tied to AI company G42, to build data centers using Nvidia’s Blackwell chips.

Announced on June 11, the collaboration highlights the UAE’s push to strengthen its AI infrastructure.

Khazna plans to build AI clusters with up to 250 megawatts of capacity using Nvidia-certified Blackwell designs.

This move is part of a broader effort by the UAE and Saudi Arabia to boost AI development as part of their economic diversification plans.

The partnership follows several AI-related agreements made during former US President Donald Trump’s visit to the Middle East in May, raising concerns about US control over advanced semiconductor tech.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ UAE’s strategic pivot to AI represents a multi-billion dollar economic diversification bet

The UAE-Nvidia partnership highlights the Gulf nation’s broader strategy to position itself as a global AI hub beyond oil dependency.

This latest collaboration adds to UAE’s growing portfolio of major AI infrastructure deals, including the recently announced OpenAI partnership to build a one-gigawatt computing cluster in Abu Dhabi 1.

G42, the government-backed AI firm involved in both deals, has become a pivotal player in UAE’s technology transition by securing partnerships with Western tech giants while maintaining strong government ties through National Security Adviser Sheikh Tahnoon.

The scale of these investments is remarkable. The UAE is committing to a joint US-UAE 5-gigawatt cluster in Abu Dhabi alone, representing one of the largest concentrated AI infrastructure investments globally 2.

For context, the France-UAE AI data center collaboration announced in February involves €30-50 billion for a 1-gigawatt facility, demonstrating the massive capital commitments Gulf states are making in this sector 3.

2️⃣ Shifting US export policies create strategic openings for Middle Eastern AI ambitions

The Nvidia-G42 partnership reflects a significant shift in US chip export policy toward the Middle East, contrasting with strict controls applied to China.

Under the Biden administration, the US implemented comprehensive AI chip export restrictions valued at $57.5 billion in 2024 4. However, the incoming Trump administration has signaled plans to rescind some of these controls to enhance US competitiveness 5.

This policy shift has created a strategic opportunity for Gulf nations like the UAE and Saudi Arabia, who are leveraging improved relations with the US to gain privileged access to advanced AI chips while China remains restricted.

The tiered licensing system for chip exports has categorized the UAE as a preferred partner, allowing it to import technology that remains unavailable to strategic rivals, a significant competitive advantage in the global AI race 6.

These dynamics explain why G42 has successfully secured partnerships with both Nvidia and OpenAI in rapid succession, positioning the UAE to potentially leapfrog other regions in AI infrastructure development.

3️⃣ The global competition for AI compute capacity drives unprecedented data center growth

The 250-megawatt AI clusters planned by Khazna and Nvidia exemplify the extraordinary scale of current data center developments driven by AI demands.

Nvidia’s Blackwell architecture, designed specifically for AI reasoning and training, requires specialized infrastructure that traditional data centers cannot support, creating an entirely new category of high-density, high-power computing facilities 7.

This trend is global. Vantage Data Centers recently raised €720 million ($821.4 million) to expand its European AI infrastructure 8, while the European data center market is projected to grow by 20% in 2025 alone, driven primarily by AI demand 9.

The economics are compelling despite enormous upfront costs. The four German data centers in Vantage’s deal were valued at approximately $1 billion with just 64 megawatts capacity 8, suggesting the UAE’s planned gigawatt-scale developments represent tens of billions in investment.

Oracle’s planned purchase of 400,000 Nvidia chips for its $40 billion Stargate project 2 illustrates the massive semiconductor demand driving this growth, with generative AI chips alone expected to account for over $150 billion in revenue in 2025 10.

Recent Nvidia developments

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