UAE’s biggest data center firm eyes US expansion

Washington is a crucial ally in the UAE’s AI ambitions. Ahead of US President Donald Trump’s visit to Saudi Arabia, Qatar, and the UAE this month, his administration is considering scrapping a Biden-era executive order that limited semiconductor chips distribution to the Gulf, seen as a potential security risk for Chinese intrusion, Reuters reported. The White House is instead mulling a licensing system, sources familiar with the matter told Reuters, a decision that Silicon Valley chipmakers would welcome.

The UAE has worked to not let such restrictions curtail their ambitions in AI, and is developing an ecosystem of investments and infrastructure — including in the US — in an increasingly two-way flow of dollars, software, and hardware between the nations. Khazna’s parent company G42 has built up four times the computing capacity in the US compared to the UAE, forged out of its relationship to California chipmaker Cerebras Systems as an investor and top customer.

Khazna, for its part, removed Chinese components from its data centers in 2022, Alnaqbi said, the same time G42 was spinning out its Chinese holdings and removing hardware sourced from the country to comply with US demands.

Alnaqbi is living proof of the UAE’s quantum leap in a single generation: The son of a fruit and vegetable farmer from a small village outside the emirate of Fujairah, he can recall losing crops to poorly managed water resources.

The Emirati executive, who has helmed the firm since its start, is focused on energy management and reducing waste. He has seen several iterations of data centers: One of Khazna’s first facilities relied on a Barjeel-style tower, a mainstay in Middle East architecture for regulating air circulation and bringing down temperatures indoors.

Khazna was formed by Abu Dhabi sovereign wealth fund Mubadala and Dubai telco Du in 2012, as the UAE government was looking to digitize and needed local data storage and computing power. In 2020, G42 took a controlling stake and this year, US private equity firm Silver Lake and Abu Dhabi AI fund MGX bought out a 40% stake from UAE telecom e& for $2.2 billion, implying a $5.5 billion valuation for Khazna.

While data centers may seem like a “one size fits most” category, the firm’s experience in operating in some of the world’s harshest conditions, and on a power grid that includes nuclear and solar, could give Khazna a competitive edge in an AI industry focused on building more resilient and less carbon-intensive facilities.

There are some signs hyperscalers are easing off on the rapid expansion that defined the last two years: Microsoft said in April it is “slowing or pausing” some of its data center construction, including a $1 billion project in Ohio. The growing strength and use of lower-cost Chinese-developed generative AI platforms such as DeepSeek has also sparked questions over future data center requirements.

• Abu Dhabi sovereign wealth fund ADQ and New Jersey investment firm Energy Capital Partners aim to invest over $25 billion to power American data centers, Axios reported.
• MGX plans to invest $8-$10 billion a year in AI, primarily in the US, an executive said in an interview at Semafor’s World Economic Summit.