$Taiwan Semiconductor (TSM.US)$ and Samsung Electronics Co. (OTC:SSNLF) are discussing the construction of massive chip-making complexes in the United Arab Emirates. These projects could be valued at over $100 billion.
What Happened: Executives from TSMC have recently visited the UAE to explore the possibility of establishing a plant complex comparable to their largest facilities in Taiwan. Similarly, senior leaders from Samsung have also visited the UAE to discuss potential chip-making operations in the region, The Wall Street Journal reported citing, people familiar with the interactions.
These discussions are in the preliminary stages and face significant technical and logistical challenges. The UAE would fund these projects, with Abu Dhabi-based sovereign development vehicle Mubadala playing a central role. Mubadala is eager to develop a domestic tech industry and increase global chip production.
The UAE's ambitions reflect a broader global push to expand chip production to meet the demands of the AI boom. However, substantial technical and political hurdles remain, including the need for super-clean water and the availability of engineering talent.
Both TSMC and Samsung have had discussions with U.S. government officials regarding concerns about shipments of advanced AI chips to China, a trading partner of the UAE. These concerns need to be resolved before construction can begin, according to the report.
"We are always open to constructive discussion on ways to promote development of the semiconductor industry, but we remain focused on our current global expansion projects and have no new investment plans to disclose at this time," a TSMC spokesperson told Benzinga in an email inquiry.
Samsung did not immediately respond to Benzinga's request for comment.
Why It Matters: The discussions between TSMC and Samsung come at a time when the Middle East is becoming increasingly significant in the global semiconductor landscape.
$Microsoft (MSFT.US)$ recently called for more transparency on U.S. export controls that have delayed the delivery of AI chips to the region. The company had invested $1.5 billion in G42, the largest AI company in the UAE, to use it as a gateway to markets in Africa and Asia.
Additionally, $NVIDIA (NVDA.US)$ has begun supplying its advanced chips to Saudi Arabia, positively influencing market sentiment in the Middle East and Asia. This move came after the U.S. reassessed its advanced semiconductor sanctions on Saudi Arabia, initially imposed in 2023 due to national security concerns.
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote