Abu Dhabi AI group G42 sells its China stakes to appease US

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Abu Dhabi artificial intelligence group G42 has sold its stakes in Chinese companies, including TikTok owner ByteDance, as the state-backed group seeks to reassure US partners by cutting ties with China.

42XFund, the $10bn technology investment arm of G42, told the Financial Times that it had “divested from all its investments in China”. 

The fund did not comment on individual deals or respond to questions about the overall size of its investment in China. However, two people with knowledge of the matter said the sell-off included shares in Beijing-based ByteDance. G42’s stake in the TikTok owner was worth an estimated $100mn, according to the data provider PitchBook. 

The United Arab Emirates is aiming to become a global leader in artificial intelligence in an effort spearheaded by G42, which is chaired by the UAE’s powerful national security adviser Sheikh Tahnoon bin Zayed al-Nahyan. But that has made the Gulf state an arena for the US and China’s geopolitical jostling over artificial intelligence.

G42 is developing a range of artificial intelligence projects, from health and life sciences to mapping and a large language model. 

Backed by investors including the UAE sovereign wealth fund Mubadala and US private equity firm Silver Lake, G42 had also been working with US partners such as Microsoft and OpenAI as well as Chinese technology companies.

But the Abu Dhabi-based group, which relies on semiconductors made by US chipmaker Nvidia, has scrambled to allay fears that companies linked to the Chinese government could gain access to American AI systems.

The New York Times reported in December that US officials were worried about the Emirati company’s relationship with groups including telecoms company Huawei, while also having concerns that G42 could provide a route for the genetic data of US citizens to reach the Chinese government and companies.

Chief executive Peng Xiao told the FT in December that G42 “cannot work with both sides” and was severing links with Chinese hardware suppliers, including Huawei.

Xiao, who was born in China, studied in the US and is now a UAE citizen, added: “In order for us to further our relationship — which we cherish — with our US partners, we simply cannot do much more with [previous] Chinese partners.”

42XFund, which has said it operates as a private equity investor with $10bn to spend in sectors ranging from climate to consumer technology, has followed suit by divesting its Chinese holdings. 

Only last March, it had participated in a $300mn funding round for JD Industrials, part of online retailer JD.com group, led by Abu Dhabi sovereign wealth fund Mubadala.

ByteDance and JD.com did not immediately respond to requests for comment sent as the country begins its Lunar New Year celebrations.

Although 42XFund’s holdings are not public, it has also made investments outside China. Last year, it led a $200mn investment round in Indonesian agriculture technology start-up eFishery. 

The fund was set up in 2022 as a partnership between G42 and Abu Dhabi Growth Fund, which was established by the Sheikh Tahnoon-chaired sovereign wealth fund ADQ. ADG declined to comment. 

OpenAI chief Sam Altman has held discussions with Sheikh Tahnoon over launching a new chip venture, as the head of the ChatGPT maker seeks to satisfy his company’s growing need for semiconductors while reducing its reliance on Nvidia.

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