According to recent reports, Taiwan Semiconductor Manufacturing Corporation (TSMC) has been engaging in discussions with officials from the White House regarding the potential establishment of a chip manufacturing facility in the United Arab Emirates (UAE). Bloomberg indicates that the company has held multiple meetings with U.S. special envoy to the Middle East, Steve Witkoff, alongside the state-owned investment firm MGX, to talk about plans for investing in and constructing a plant in the region. This proposed facility would be of comparable scale to TSMC’s current project in Arizona, though specific details remain undisclosed.
This is not the first instance of semiconductor manufacturers considering the establishment of a major facility in the UAE. Both Samsung and TSMC have expressed interest in launching their own operations in the country, aiming for a timeline in the third quarter of 2024, with top executives visiting the region to initiate discussions. TSMC even initiated talks with the Biden administration earlier, but those discussions did not lead to any concrete outcomes.
Reports suggest that Washington desired to maintain sovereign control over the manufacturing site, a condition that was not agreeable to the UAE authorities. Moreover, senior officials from the previous Trump administration raised two significant concerns regarding the proposal: the first issue centered around its potential adverse impact on TSMC’s Arizona project. The chip manufacturer has committed $165 billion for the expansion of the Arizona facility, with $42 billion of that planned for expenditure in 2025.
Additionally, there are logistical challenges as the UAE lacks a sufficient number of skilled professionals to construct and operate the factory, which would necessitate TSMC recruiting staff from other locations. This could potentially disrupt operations in the United States, particularly if key personnel transition to the new facility in the Middle East.
The second, more critical concern pertains to national security. While the UAE has established a strong relationship with the U.S., the influence of China and Iran in the region poses a risk. A shift in the geopolitical landscape could enable adversaries to gain easier access to advanced chips produced outside of U.S. control, counteracting efforts to restrict access to these technologies.
Despite these concerns from high-level officials, the UAE is fervently working towards becoming a leading technology hub in the Middle East. It has already received U.S. approval for the acquisition of Nvidia AI GPUs through its homegrown AI datacenter company, G42. Recently, OpenAI revealed plans to expand its Stargate AI infrastructure in the UAE, including a project for a 1 GW data center in Abu Dhabi.
Even with apprehensions from some officials, the UAE continues to pursue the establishment of an advanced chip manufacturing plant. David Sacks, who served as Trump’s AI and Crypto Czar, reportedly supported the idea, suggesting that the U.S. should aggressively distribute its AI technologies globally to avoid losing market share to Chinese firms.
However, no further discussions on this topic have materialized. In response to inquiries regarding this possibility, TSMC informed Bloomberg that it refrains from commenting on speculations. Meanwhile, the White House and the office of the U.S. special envoy to the Middle East did not respond to questions, nor did the UAE’s Ministry of Foreign Affairs or MGX provide any comments on the matter.