"Samsung and TSMC Discuss Semiconductor Factory Construction in UAE... Oil Money Also Eyeing Semiconductors"

WSJ Report
UAE Lays Groundwork to Accelerate AI Development Through Stable Semiconductor Supply
"Early Stage Discussions... Uncertain Outcome Due to Technical and Political Barriers"

Samsung Electronics and Taiwan's TSMC are reportedly discussing plans to build a large semiconductor factory in the United Arab Emirates (UAE) with an investment exceeding $100 billion (approximately 134 trillion won). While governments in the United States, Europe, and other countries are pouring subsidies into building domestic semiconductor supply chains, Middle Eastern countries increasing investments in artificial intelligence (AI) are also seeking to secure stable semiconductor supplies based on vast 'oil money.'

On the 22nd (local time), the US economic daily The Wall Street Journal (WSJ) reported, citing sources, that executives from Samsung Electronics and TSMC recently visited the UAE.

According to the report, Samsung Electronics has discussed with the UAE side plans to build a new semiconductor manufacturing plant within a few years. TSMC also exchanged opinions on building a semiconductor manufacturing complex. Initial discussions indicate that the UAE will provide funding for the semiconductor factory construction project. Mubadala, a sovereign wealth fund based in Abu Dhabi focusing on AI investments, will play a leading role. If the semiconductor factory construction is realized, it is expected to involve costs exceeding $100 billion in total.

This semiconductor factory construction discussion is closely related to the UAE's ambitious plan to play a leading role in the global tech industry by expanding AI investments based on vast oil money. Since 2017, the UAE has established an AI-related ministry and embarked on large-scale investments, showing strong enthusiasm for AI technology development. It is analyzed that the plan to attract semiconductor factories from Samsung Electronics and TSMC aims to build a semiconductor supply chain necessary for AI development.

However, since the discussions are still in the early stages and there are many hurdles to overcome, such as technical and political barriers, inefficiencies in building supply chains within the UAE, and issues with engineering personnel, there is a possibility that the project may not materialize. Concerns have also been raised that if Samsung Electronics and TSMC establish semiconductor factories in the UAE, advanced AI semiconductors could flow to China, a major trading partner of the UAE. In this regard, it is known that before discussing semiconductor factory construction with the UAE, Samsung Electronics and TSMC exchanged opinions with the US side, which enforces semiconductor export controls against China.

The WSJ stated, "If TSMC and Samsung push forward with the project, they will lead a new wave of industrial expansion following the era of manufacturing growth driven by subsidies from governments in the US, Europe, and East Asia," but also added, "However, semiconductor manufacturers do not expect US concerns about China to be resolved soon, so it is highly likely that construction of the (UAE) factory will not begin until then."