TSMC and Samsung interest in UAE could boost chip supply chain

The Emirates is boosting its investment in technology, particularly AI

Taiwan Semiconductor Manufacturing Company counts Apple, Nvidia, AMD, Qualcomm and Intel among its biggest clients. Reuters

While Taiwan Semiconductor Manufacturing Company and Samsung Semiconductor have not stated that they are in talks to explore building factories in the UAE, their interest could contribute to the Gulf country's AI ambitions.

TSMC told The National on Monday that it is "always open to constructive discussion on ways to promote development of the semiconductor industry", but declined to comment on a report in The Wall Street Journal on Sunday stating its intent.

The company, whose clients include bellwethers Apple, Nvidia, AMD, Qualcomm and Intel, said it "remain[s] focused on our current global expansion projects and have no new investment plans to disclose at this time".

Seoul-based Samsung did not respond to a request for comment.

Nonetheless, the companies' alleged interest is another signal of the UAE's growing technology influence, potentially providing a boost to global manufacturers' supply chains and their strategic plans.

TSMC and Samsung are the second and fifth biggest chipmakers by market capitalisation, respectively.

Their entry "would signify a monumental shift for the global chip industry and could catalyse the Middle East's evolution as a formidable tech hub", Ziad Nasr, general manager of cyber security firm Acronis Middle East, told The National.

It could also provide a strategic advantage, as the UAE offers a regional base with supply-chain resilience and supports growing demand for advanced computing, he said.

"This move reflects the UAE's ambition to diversify its economy and position itself at the forefront of the global technology landscape, particularly in the artificial intelligence and semiconductor industries."

For the global chip industry, it would create a "new power centre" in AI and advanced computing, with the Middle East potentially transitioning from being a technology consumer to a major producer and innovator, said Andreas Hassellof, chief executive of Dubai-based tech firm Ombori.

"Geopolitically, this move could reshape tech alliances and ease supply chain pressures around chip manufacturing. If successful, we're looking at the potential emergence of a new global AI superpower, with the UAE as a gatekeeper for AI innovation ... attracting further investments and partnerships," he told The National.

The UAE has been investing in the semiconductor industry as it positions itself as a technology hub and prepares for the economy of the future. In the past year alone, it has struck a number of international deals to accelerate this strategy.

The most notable was the $1.5 billion investment Abu Dhabi AI company G42 received from Microsoft in April. G42 last week teamed up with Nvidia to develop AI solutions aimed at enhancing the accuracy of weather forecasting globally.

G42, at last year's Gitex Global tech exhibition in Dubai, also signed an agreement with ChatGPT maker and generative AI driver OpenAI, as the latter sought to expand its presence in the Middle East.

Also last week, Microsoft teamed up with Abu Dhabi-based technology company MGX, BlackRock and Global Infrastructure Partners to launch an AI infrastructure investment partnership that aims to mobilise up to $100 billion.

In May, the UAE and France joined forces for an AI investment partnership that will include developing talent and the creation of semiconductors.

Abu Dhabi's strategic investment arm, Mubadala Investment Company, already has a stake in the New York-based chipmaker GlobalFoundries.

Demand for advanced chips currently outstrips supply, making the UAE's move to become a manufacturing hub "strategically brilliant", Mr Hassellof said.

"With open-source AI models advancing rapidly, the competitive edge in AI now lies in access to valuable data, cutting-edge hardware and energy resources," he said. "This aligns the UAE with the new realities of AI competition. With their financial resources for data acquisition and energy infrastructure, adding preferential access to state-of-the-art chips could catapult the UAE to the forefront of AI innovation."

There are challenges that need to be addressed, including the requirement for advanced infrastructure and a skilled workforce to support such complex operations, said Karim Azar, regional vice president for the Middle East and Turkey at California-based software firm Cloudera.

"Nonetheless, if successful, the UAE could solidify its status as a tech powerhouse, creating a ripple effect across the region and fostering further innovation in the Middle East," he told The National.