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TSMC and Samsung in early UAE talks

24 September 2024

Two of the world's largest semiconductor manufacturers, Taiwan Semiconductor Manufacturing Company (TSMC) and South Korea's Samsung Electronics, are in preliminary discussions to establish advanced semiconductor manufacturing facilities in the UAE.

According to a Wall Street Journal report, these talks aim to address the growing demand for artificial intelligence (AI) computing capabilities.  

The report suggested that executives from TSMC have visited the UAE to explore the possibility of creating a plant complex that could match their sophisticated operations in Taiwan. 

Samsung has also dispatched representatives to the Gulf state to discuss potential new ventures.  

The report stated: "Although these discussions are at an initial stage, and the projects may not materialise due to various challenges, the scale of the proposed developments could see investments exceeding $100bn."  

Samsung has not issued any comments on the matter.  

TSMC stated that it is currently concentrating on its existing expansion projects, which are located in the US, Japan, and Germany, and has no new investment plans to announce at this time. 

The UAE is positioning itself as a regional AI hub and a testing ground for the technology.  

Mubadala, Abu Dhabi's investment arm and the majority owner of GlobalFoundries, initially planned to construct a chip factory in the Middle East. 

However, the Gulf region's lack of necessary infrastructure has hindered such ambitions, given the immense costs and rapid obsolescence associated with chip plant construction and maintenance, the Wall Street Journal report stated.

Capital-intensive semiconductor companies typically favour locations with established industry clusters, skilled labour and proximity to suppliers and support services.

Abu Dhabi's AI push  

Abu Dhabi has recently stepped up efforts to develop a local AI industry and expand global AI investments. 

Abu Dhabi-based AI company G42 secured a $1.5bn investment from Microsoft earlier this year and announced plans to establish two local centres for AI industry standards development. 

G42 has also announced a partnership with Nvdia to create a climate technology lab, marking its first collaboration with the company whose chips are crucial for AI software development.  

On 18 September, Abu Dhabi's AI-focused investment company MGX announced a partnership with US-headquartered BlackRock, Global Infrastructure Partners (GIP) and Microsoft to establish the Global AI Infrastructure Investment Partnership (GAIIP).

The vehicle will "make investments in new and expanded data centres to meet growing demand for computing power, as well as energy infrastructure to create new sources of power for these facilities".

The partnership will initially seek to unlock $30bn of private equity capital from investors, asset owners and corporates, which in turn will mobilise a total investment potential of up to $100bn when including debt financing.

Photo credit: Pixabay

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Jennifer Aguinaldo

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