Global chip giants Taiwan Semiconductor Manufacturing Company and Samsung Electronics have been in talks with the UAE to explore building megafactories in the Middle East, reported The Wall Street Journal citing people familiar with the interactions and strategies involved.

 

Top executives at TSMC have visited the Gulf state recently to discuss plans of building factory complexes that are comparable to some of the company’s largest and most sophisticated facilities in Taiwan, the report said.

 

According to senior sources, the potential projects in the UAE could be worth more than $100 billion.

 

Under the initial terms discussed in the meetings, they would be largely funded by the UAE.

 

Abu Dhabi sovereign wealth fund Mubadala, which has been tasked with funding the expansion of its domestic semiconductor manufacturing, will play a key role, according to the report.

 

South Korea-based Samsung Electronics has also been considering investing in building chip manufacturing facilities in the country in the coming years. Senior leaders in the South Korean company have recently visited the country to explore the idea, stated the WSJ report.

 

The Gulf state has been ramping up efforts and investments in developing its domestic tech industry as it works to build its position as a global hub for advanced technology and artificial intelligence. However, the discussions with UAE officials are still in the early stages, it added. 

 

A tug-of-war between the US and China has played out in the region as tech deals speed up and Washington grows increasingly wary over Beijing’s influence in the Gulf state. 

 

The two chip-making giants have discussed building huge factory complexes in the UAE that could transform the industry in the coming years and become a cornerstone for artificial-intelligence investments in the Middle East, reported CNBC citing senior sources.

 

TSMC and Samsung have held discussions with US officials who are worried about potential shipments of advanced AI chips coming from UAE-based plants to China.

 

The US will likely continue to pressure the UAE not to work with China, “as there would be advanced AI-related chips being produced in these plants,” Alex Capri, a senior lecturer at National University of Singapore’s business school, told CNBC.

 

Nvidia’s AI chips are crucial to technology from smartphones to chatbots. Their production is outsourced to just one company in Taiwan. With growing fears that China may stage an invasion of the island, the US is racing to secure the supply chain, he added.