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Juan Carlos López
Senior WriterAn engineer by training. A science and tech journalist by passion, vocation, and conviction. I've been writing professionally for over two decades, and I suspect I still have a long way to go. At Xataka, I write about many topics, but I mainly enjoy covering nuclear fusion, quantum physics, quantum computers, microprocessors, and TVs.
Karen Alfaro
WriterCommunications professional with a decade of experience as a copywriter, proofreader, and editor. As a travel and science journalist, I've collaborated with several print and digital outlets around the world. I'm passionate about culture, music, food, history, and innovative technologies.
TSMC is evaluating the possibility of building a state-of-the-art integrated circuit manufacturing plant in the United Arab Emirates (UAE). The world’s largest chipmaker has embarked on an ambitious plan to expand its manufacturing infrastructure beyond Taiwan to protect itself from a potential armed conflict with China.
TSMC is building new semiconductor production plants in the U.S., Germany, Japan, and Taiwan. This potential UAE fab would help cement TSMC’s network of state-of-the-art plants outside Taiwan. However, talks between TSMC executives and the Emirati government began in September 2024.
According to Tech in Asia, during the most recent shareholder meeting, TSMC President C.C. Wei stated that his company wouldn’t build a state-of-the-art integrated circuit factory in the UAE. This conflicts with reports from The Wall Street Journal, Reuters, Bloomberg and other reputable media outlets. More information about this dispute will likely become available over the next few days.
TSMC and the UAE Win. It’s Unclear Whether the U.S. Will As Well
At the end of September 2024, The Wall Street Journal and Reuters revealed that several TSMC and Samsung executives had traveled to the UAE to negotiate the construction of state-of-the-art integrated circuit manufacturing plants in the Middle Eastern country. According to these sources, the Emirati government is willing to finance these plants.
Like Saudi Arabia, the UAE needs to diversify its economy in anticipation of oil’s likely loss of relevance in the medium term. Technology is currently a safe bet. Moreover, the semiconductor industry’s growth potential is enormous. Look no further than the AI hardware market to see this.
According to Allied Market Research, the market for AI application chips will generate more than $263 billion in revenue by 2031. This is a significant increase, especially since its business amounted to just over $11 billion in 2021. TSMC and Emirates are the winners at the current juncture. However, this project wouldn’t have come to fruition without the approval of the U.S. government.
By 2031, the AI chip market will have over $263 billion in turnover.
Much of the photolithography and wafer processing equipment TSMC uses in its factories relies on U.S.-origin technologies. Some of its production processes also rely on U.S.-held patents. This dependence gives President Donald Trump the power to support or prohibit the construction of cutting-edge chip manufacturing plants in the UA and other countries.
Currently, the relationship between the U.S. and UAE administrations is good. However, the UAE also has close ties with China and Iran. If future geopolitical developments cause the UAE to move closer to China and Iran and further away from the U.S., a state-of-the-art semiconductor fab that is not under U.S. control would pose a security problem for the U.S. While the U.S. government has allowed Nvidia to sell its GPUs to Emirati customers and OpenAI to establish a presence in the country, it seems unlikely that it will support this TSMC project.
Image | TSMC
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