TSMC and Samsung in Talks with UAE to Establish Chip Factories

According to reports, TSMC and Samsung are currently in discussions with the United Arab Emirates (UAE) to set up chip manufacturing plants in the Gulf nation. The Wall Street Journal has stated that this initiative, dubbed the "desert dream," is in line with the UAE's ambitious goals of diversifying its economy away from oil and becoming a major player in the AI industry by producing AI chips domestically. The UAE, along with neighboring Saudi Arabia, aims to use their oil wealth to invest in cutting-edge manufacturing, with a particular focus on AI due to its high computational requirements. The successful establishment of chip factories could greatly enhance the region's AI capabilities and have a significant impact on the global semiconductor supply chain. However, there are significant challenges ahead.

Previous efforts to launch semiconductor manufacturing in the Gulf, such as the GlobalFoundries project over ten years ago, have not progressed beyond the initial planning stages. The current proposal faces even greater hurdles, with projected costs exceeding $100 billion for a state-of-the-art facility and the necessary infrastructure. Geopolitical issues further complicate matters. Recent US restrictions on exporting certain chips to the Gulf region could hinder the transfer of advanced manufacturing processes to the UAE. Despite these obstacles, the potential rewards are substantial.

For the UAE, success in this endeavor would mark a significant milestone towards economic diversification and technological leadership. TSMC and Samsung could establish a strategic presence in a region eager for technological progress. TSMC has mentioned its focus on ongoing expansion projects in the US, Japan, and Germany, while Samsung has chosen not to comment on the matter.