TSMC Eyes UAE for Chip Manufacturing Amid US-UAE Talks

In a significant move for the Middle East’s tech landscape, the United States and the United Arab Emirates are in talks to establish an advanced TSMC chip manufacturing plant in the UAE. This development, reported by Bloomberg, could position the UAE as a key player in the semiconductor industry, beside Israel, which currently relies on Intel for advanced chip production.

High-Stakes Negotiations

The discussions between the U.S. and UAE involve the investment firm MGX, closely linked to the UAE President’s brother, and U.S. representative Steve Witkoff. These talks originally began under President Joseph Biden’s administration and were stalled during Donald Trump’s tenure. Recently, dialogues resumed with regular meetings involving TSMC and MGX representatives.

Challenges and Prospects

The U.S. plays a crucial role in these negotiations due to its control over the export of technologies that TSMC relies on for chip production. American legislation can restrict the transfer of advanced technologies beyond Taiwan, ensuring that states with strained relations cannot easily access them. Despite these constraints, the UAE presents an attractive option due to its vast resources and ambition to join the semiconductor market.

The exact investment size and timeline for the UAE project remain indefinite, though foundation work might not begin for several years. The UAE could join other TSMC overseas sites, including those in the USA, Germany, and Japan. However, the country needs a skilled workforce to advance in chip manufacturing, an industry extremely reliant on technical expertise.

Potential U.S. Concerns

Some U.S. officials express reservations, citing the potential diversion of TSMC’s resources from their American operations in Arizona. Security concerns are also noted, given the UAE’s possible ties with countries like Iran and China, which could influence the technological competition landscape.

Contextual Note: The UAE’s ambition in the semiconductor industry is not new. After acquiring AMD’s assets in 2009, investors from UAE showed interest in constructing a GlobalFoundries plant in the region, a plan that didn’t materialize. Recent rumors hint at potential collaboration with Samsung Electronics for similar pursuits.