Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics are in discussions about establishing large chip manufacturing complexes in the United Arab Emirates, with potential projects valued at over $100 billion.
These factories could significantly impact the semiconductor industry and support the growing demand for artificial intelligence technologies in the region.
Recent visits by TSMC executives to the UAE have involved talks about creating facilities comparable to the company’s advanced plants in Taiwan. Similarly, senior leaders from Samsung have engaged in discussions regarding potential operations in the country.
While talks are still in preliminary stages, they face numerous technical and logistical challenges that could hinder progress. The proposed projects would primarily be funded by the UAE, particularly through the Abu Dhabi-based sovereign development vehicle, Mubadala, which aims to bolster the domestic tech industry and expand global chip production.
Mubadala has identified semiconductor manufacturing as a key area for development. Although no specific plans are finalized, a spokesman noted ongoing dialogues with potential partners. The broader objective is to enhance global chip supply and reduce prices while ensuring profitability for manufacturers.
However, significant hurdles remain. Chip production requires extensive resources, including large quantities of ultra-purified water, which poses a challenge in the UAE, where much of the water supply comes from desalination. Additionally, there are concerns about the availability of skilled engineering talent to support new manufacturing facilities.
Should TSMC and Samsung proceed, these developments could represent a pivotal expansion in the semiconductor sector, following a wave of government-backed manufacturing initiatives in the US, Europe, and East Asia.
The US government has expressed concerns about advanced AI chip shipments to China, a significant trading partner for the UAE. Discussions have taken place between the chipmakers and US officials regarding potential oversight of production and shipments from any new UAE facilities.
Reuters, Market Watch, the Wall Street Journal, and Bloomberg contributed to this report.
