Desert Chip Boom: UAE Lures Samsung and TSMC in Groundbreaking Semiconductor Plant Deal
- The Wall Street Journal (WSJ) reported on the 22nd (local time) that TSMC and Samsung Electronics, which came first and second in global foundry market share (semiconductor batch...
- According to sources familiar with the discussions, senior executives from TSMC and Samsung Electronics recently visited the UAE to discuss the construction of large-scale factories.
- Sources said talks have been held regarding setting up a new factory with state-of-the-art facilities discussed by TSMC, which would make it the largest facility in Taiwan.
TSMC and Samsung Electronics Discuss Building Semiconductor Factory in UAE
High-level executives from both companies visit UAE to discuss construction of new factory
The Wall Street Journal (WSJ) reported on the 22nd (local time) that TSMC and Samsung Electronics, which came first and second in global foundry market share (semiconductor batch production), discussed the establishment of a semiconductor factory with the United Arab Emirates (UAE).
According to sources familiar with the discussions, senior executives from TSMC and Samsung Electronics recently visited the UAE to discuss the construction of large-scale factories.
Sources said talks have been held regarding setting up a new factory with state-of-the-art facilities discussed by TSMC, which would make it the largest facility in Taiwan. Once Samsung Electronics reaches an agreement to build a new factory, it is expected to put it into operation within a few years.
The talks are said to be in the early stages and will focus on Mubadala, the UAE’s sovereign wealth fund, to provide financial support. Mubadala expressed a cautious stance, saying that it is in regular dialogue with partners around the world, but that there are currently no specific plans to build a new semiconductor factory in the UAE.
The plan to build a new factory in the UAE reflects the significant increase in demand for semiconductors due to the current artificial intelligence (AI) boom. With the construction of a new factory, semiconductor manufacturers are said to be aiming to increase semiconductor production and lower supply prices without losing profitability.
WSJ evaluated, “If TSMC and Samsung go ahead with this project, it could open a new era of industrial expansion following the period when manufacturing grew thanks to government subsidies in the United States, Europe and East Asia.”
There are predictions that $20 billion (approx. KRW 26.72 trillion) may be needed to build one new factory, and if all the facilities with multiple factories are built, the cost will exceed $100 billion (approx. KRW 133.6 trillion predict that it could be).
However, there is a possibility that it will not materialize due to technical issues and the political environment.
The supply of large amounts of highly pure water required during the semiconductor manufacturing process is considered a barrier. Most of the water resources that the UAE has are produced through desalination, which requires significant purification use.
There are also forecasts that it may be difficult to send qualified talent to the UAE, which has almost no semiconductor manufacturing supply chain.
In addition, the US government’s concerns about the possibility of exporting advanced AI semiconductors to China, one of the UAE’s trading partners, is also mentioned as an issue that needs to be resolved.
TSMC and Samsung have already exchanged views with US government officials regarding the possibility of exporting advanced semiconductors to China. Although the two sides have not yet decided on the details, a plan was discussed to allow the US government to oversee the manufacturing process and the shipment of semiconductors produced in UAE factories.
Some officials from the semiconductor manufacturing industry explained that they do not believe that America’s concerns about China will disappear in the short term, and unless this process is resolved, the construction of new factories will likely not be started.
The United Arab Emirates, a member of the Organization of the Petroleum Exporting Countries (OPEC), is a major producer of oil and natural gas. Like other natural resource powers, the UAE has sought to diversify its industrial structure in recent decades.
The UAE has previously invested in the semiconductor industry. In 2008, AMD’s manufacturing division was spun off and management rights were taken over. At the time, a plan to set up a semiconductor factory in the United Arab Emirates was discussed, but never materialised.