TSMC, Samsung Reportedly Mulling UAE Chip Megafactories

Taiwan Semiconductor Manufacturing Co. (TSM) and Samsung Electronics reportedly have been considering building large new chip-making factories in the United Arab Emirates amid surging demand for artificial intelligence (AI) computing.

According to The Wall Street Journal, the projects being discussed “involve complexes that could contain numerous factories and cost over $100 billion in aggregate,” but “government officials and industry executives say substantial technical and political hurdles remain.”

Among the hurdles on the technical side: The need for “super-clean water” to rinse silicon wafers—an issue when most of the UAE’s water is produced via desalination—and “concerns about the availability of engineering talent to staff major new factories far from the companies’ home bases.”

Samsung, TSMC Have Had Talks With US on Chips Sales To China

The report also said that the two companies have had talks with U.S. officials worried that the advanced AI chips produced would make their way to China, a key trading partner of the UAE.

Government subsidies globally have been helping the chip industry expand in the U.S., Europe, and Asia. In the U.S., the government has been doling out billions in grants as part of the CHIPS and Science Act of 2022 to ensure production is done domestically.

TSMC’s American depositary receipts (ADRs), which edged higher as markets opened Monday, are up almost 70% this year.