Taiwan Semiconductor and Samsung Electronics are considering building a chip factory in the United Arab Emirates

According to the financial news app Zhitong Finance, it is reported by media citing informed sources that Taiwan Semiconductor (TSM.US) and Samsung Electronics (SSNLF.US) are discussing the construction of a large chip factory in the United Arab Emirates in the coming years to meet the growing demand for artificial intelligence computing.

The report stated that executives from Taiwan Semiconductor recently visited the United Arab Emirates to discuss building a comprehensive factory that can rival Taiwan's advanced facilities. Citing another person familiar with Samsung Electronics' strategy, the report mentioned that Samsung Electronics has also dispatched relevant personnel to the United Arab Emirates to discuss significant new business in the country.

The report added that the discussions are still in the early stages, and considering the technical and other obstacles these projects face, they may not succeed. The projects under consideration may require an investment exceeding $100 billion, as indicated in the report.

The United Arab Emirates is striving to establish itself as a regional hub and testing ground for artificial intelligence. More broadly, Gulf countries have been working to reduce their dependence on petrochemical products. For over a decade, they have viewed the semiconductor industry as a growth opportunity. For example, Mubadala Investment, based in the United Arab Emirates, is a major shareholder of GlobalFoundries (GFS.US).

However, these efforts have faced challenges, partly due to the lack of necessary infrastructure in the Gulf region to justify the construction of chip factories, which require billions of dollars for construction and equipment - without updates, they quickly become outdated. Chip manufacturers prefer to build factories in clusters so they can leverage skilled labor, existing infrastructure, and proximity to suppliers and support.

G42, an Abu Dhabi-based artificial intelligence company, is at the forefront of driving artificial intelligence in the country. Last week, Nvidia announced a partnership with G42 to create a climate technology lab. According to a statement, the two companies will focus on developing artificial intelligence that can improve weather forecasting accuracy. They will rely on Nvidia's climate digital twin cloud platform, Earth-2, which aims to help scientists and researchers better understand and predict the impact of climate change through high-precision simulation and visualization technologies, thereby reducing economic losses caused by extreme weather.

In addition to Nvidia, Microsoft announced a collaboration with G42 to establish an artificial intelligence research institute. The two companies will open two centers in Abu Dhabi to conduct "responsible" artificial intelligence projects. According to the companies, this deal builds on a partnership established in April, where Microsoft will invest $1.5 billion in G42. G42 has also partnered with OpenAI, which is seeking to expand in the Gulf region