Global semiconductor giants Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics are in talks with the United Arab Emirates (UAE) to build a large-scale semiconductor manufacturing plant in the Gulf state, according to sources.
The potential project, worth more than $100 billion, could have a major impact on the semiconductor industry and contribute to artificial intelligence (AI) development in the region.
TSMC in talks with Samsung
Executives from TSMC and Samsung, the world’s largest chipmakers, recently visited the UAE to explore the possibility of building factories to rival their largest and most advanced facilities in Taiwan and South Korea.
Although talks are still in their early stages and no formal agreement has been reached, these projects could transform the UAE into a major player in global semiconductor production.
A TSMC official confirmed that no new investment plans had been announced. In a statement to Reuters, TSMC said: “While we always welcome constructive discussions on ways to promote the development of the semiconductor industry, we remain focused on our current global expansion projects and have no new investment plans to announce at this time.”
Samsung is also considering building a large chip manufacturing plant in the UAE, but declined to comment on the talks.
This provided photo obtained by Reuters on Sept. 7, 2022, shows a Samsung Electronics semiconductor production plant in Pyeongtaek, South Korea. (Reuters Photo)
Funding and Key Stakeholders
According to The Wall Street Journal, the project will be funded by the UAE government, with Abu Dhabi’s sovereign wealth fund Mubadala playing a central role. The overall goal is to boost global chip production capacity while allowing chipmakers to remain profitable, especially in an industry where demand for advanced AI chips is surging.
But major challenges remain, including the need for clean water – a vital resource for chip production – and a sufficient supply of qualified engineers, which could hinder the project’s progress.
US-China tensions
As technology deals accelerate across the Middle East, U.S. officials have expressed concern about the UAE’s growing tech partnerships, particularly the potential transfer of advanced AI-related chip technology to China.
Washington is likely to pressure the UAE to avoid cooperating with China, as AI chips could be produced in UAE factories and end up in Chinese hands.
“The US is likely to continue to pressure the UAE not to work with China as these factories could produce advanced AI-related chips,” said Alex Capri, a senior lecturer at the National University of Singapore.
Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan (L) meets with Chinese President Xi Jinping in Abu Dhabi, United Arab Emirates, July 19, 2018. (Reuters Photo)
AI chip boom
Driven by the rapid expansion of AI technology, the demand for advanced AI chips has surged, playing a key role in driving the growth of semiconductors.
Companies such as Nvidia, which uses TSMC’s manufacturing technology to produce AI chips for tech giants such as Microsoft and Alphabet, have seen their stock prices soar in recent years.