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Chipmaker giants TSMC and Samsung are discussing plans to build massive semiconductor factories in the United Arab Emirates. The UAE would finance the projects, while the US would oversee operations.

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TSMC executives have talked about constructing a multi-factory complex rivaling its largest and most advanced facilities in Taiwan, sources told The Wall Street Journal. The project, which would span several factories, could cost more than $100 billion.

Samsung is also mulling new chip plants in the UAE in coming years, though no decisions have been made. The goal is to boost global chip production and lower prices without hurting chipmakers' profits.

UAE to fund projects, US seeks oversight

Under the proposed terms, the UAE would fund the projects, with Abu Dhabi's Mubadala investment fund playing a key role in developing a domestic technology industry. This includes MGX, a sovereign wealth fund that is also reportedly in chip talks with OpenAI. A Mubadala spokesman said it's in "regular dialogue with partners around the world" but has no concrete plans to announce.

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Abu Dhabi aims to create a "national champion" for AI investments through its new fund. Sheikh Tahnoon bin Zayed al-Nahyan, the UAE president's brother, oversees the fund and AI firm G42, which partners with OpenAI, Microsoft and Cerebras.

The factory plans are tied to political concerns about the US-China AI race. TSMC and Samsung are talking to US officials concerned about advanced AI chip supplies to China, a trading partner of the UAE.

The companies have discussed giving the U.S. oversight of chip production and shipments from the UAE plants. Details are still being worked out.

A US National Security Council spokesperson told the WSJ: "We have worked extensively with the U.A.E. on areas of advanced technology over the last two years, and the partnership is moving in the right direction."

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Summary
  • TSMC and Samsung are in talks to build large chip factories in the United Arab Emirates. The projects would be financed by the UAE, particularly the state investment funds Mubadala and MGX, which have made the semiconductor industry a focus of their strategy.
  • The overall aim is to increase global chip production and reduce prices without affecting the profitability of chip manufacturers.
  • The construction of the factories will be linked to political conditions. The U.S. wants to monitor the production and shipment of chips from the UAE factories because it is concerned about shipments of advanced AI chips to China, a trading partner of the UAE.
Online journalist Matthias is the co-founder and publisher of THE DECODER. He believes that artificial intelligence will fundamentally change the relationship between humans and computers.
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