(Bloomberg) — Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. are in talks to build a massive new factory in the United Arab Emirates over the next few years to meet surging demand for artificial intelligence (AI) computing, The Wall Street Journal reported.
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Executives from TSMC, the world’s largest chipmaker, visited the UAE recently to discuss building a complex of factories to rival its advanced facilities in Taiwan, the newspaper reported on Sunday, citing people familiar with the matter.
South Korea’s Samsung also recently sent envoys to the Middle Eastern nation to discuss a major new venture there, The Wall Street Journal reported, citing a second person familiar with the company’s strategy.
The Wall Street Journal reported that talks are still in their early stages and that the project may not go ahead given the various technical and other obstacles it faces. A project of the scale under consideration could cost more than $100 billion to complete, the paper reported.
The UAE is aiming to become a regional hub and testing ground for AI, including potentially backing OpenAI CEO Sam Altman’s ambitious plans to scale up machines and systems for the technology.
More broadly, Gulf states have been seeking to reduce their reliance on petrochemicals. For more than a decade, they have been targeting the semiconductor industry as a growth opportunity. Mubadala, the investment arm of Abu Dhabi, is a majority owner of GlobalFoundries, a former Advanced Micro Devices fab. The acquisition was originally intended to lead to the construction of a factory in the Middle East.
But one reason these efforts have not worked is that the Gulf states lack the infrastructure to justify building semiconductor fabs, which cost tens of billions of dollars to build and equip, and quickly become outdated if not updated. Chipmakers prefer to build clusters of factories, where they can take advantage of pools of skilled labor, existing infrastructure, and proximity to suppliers and support.
Abu Dhabi-based G42 is at the center of the UAE’s AI push: It received a $1.5 billion investment from Microsoft earlier this year and the two companies just announced plans to set up two centers in the UAE to develop AI industry standards.
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Last week, G42 announced a partnership with NVIDIA to set up a climate technology lab, marking the company’s first collaboration with the company, which makes chips essential to the development of AI software. G42 also has an agreement with OpenAI, the developer of ChatGPT.
But the UAE’s emergence as an AI powerhouse has also raised concerns in the U.S. government, which wants to ensure it isn’t providing sensitive technology to China. Prior to the Microsoft deal, G42 agreed to end all collaboration with the UAE.
(Updated with more details on the UAE’s AI efforts starting in the fifth paragraph.)
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