TSMC and Samsung Electronics, two of the world's leading semiconductor foundries, are considering an unprecedented move: building a hyperscale fab in the United Arab Emirates (U.A.E.). Since the Wall Street Journal revealed this news, it has attracted widespread attention from the global semiconductor industry. If this ambitious plan is realized, it will not only revolutionize the U.A.E.'s technology industry, but also potentially reshape the global semiconductor supply chain.
According to the Wall Street Journal, the U.A.E. government is considering investing more than $100 billion (about 705.343 billion yuan) to build an advanced semiconductor manufacturing complex with multiple fabs. The project is led by Mubadala, the U.A.E.'s sovereign investment fund, which aims to boost the country's tech industry and seek economic growth beyond oil wealth. Mubadala, who had previously ventured into the semiconductor industry, acquired GF's GlobalFoundries in 2008 and explored the possibility of building a factory in the U.A.E., although it ultimately did not materialize.
Pictured: TSMC and Samsung want to build a hyperscale fab in the United Arab Emirates (U.A.E.).
Executives from TSMC and Samsung Electronics recently visited the U.A.E. to discuss the possibility of building a large-scale production facility. TSMC is considering building factories that are expected to rival those of its factories in Taiwan, while Samsung Electronics plans to launch a large-scale chip foundry business in the country in the coming years. These discussions are still in their preliminary stages, but have already revealed the many challenges facing the project, including natural resources, human resources, geopolitics, etc.
Water is an indispensable element in chip manufacturing, especially when critical steps such as cleaning silicon wafers require large amounts of ultrapure water. U.A.E.'s water resources rely heavily on desalination, a costly approach that may not be sufficient to meet the stringent requirements of semiconductor production, necessitating additional large-scale deep purification facilities. In addition, the current semiconductor supply chain in the U.A.E. is immature, and there is a lack of sufficient industry talent, especially engineers who can operate advanced fabs, which will be another major bottleneck restricting the progress of the project.
Geopolitical factors, uncertainties in the international trade environment, and competitive dynamics in the global semiconductor market may all have an impact on the project. A spokesperson for Mubadala said that as one of the cornerstone partners of the technology investment company, MGX sees semiconductor manufacturing as one of the strategic pillars and continues to maintain a dialogue with global partners. However, the spokesperson did not give a positive response to the specific fab construction plan.
Despite the challenges, TSMC and Samsung's plans to build a fab in the U.A.E. are still in the spotlight. This will not only promote the rapid development of the U.A.E. technology industry, but also hope to improve the overall supply capacity and promote the reasonable return of chip prices in the context of tight global semiconductor production capacity. In the future, with the deepening of negotiations between the two parties and the gradual clarification of project details, this plan is expected to bring new changes to the global semiconductor industry.
In addition, U.A.E., TSMC and Samsung have also approached the United States Biden administration and may need to have the United States oversee the chip production and shipment of U.A.E. fabs to allay the United States government's concerns about the possible transfer of advanced AI chips to China. It is rumored that TSMC and Samsung do not believe that United States' doubts about China can be resolved quickly, and it is unlikely to build a factory in the U.A.E. until this problem is resolved.
In today's increasingly competitive global semiconductor industry, this move by U.A.E. is undoubtedly a bold attempt. If successful, it will not only bring economic transformation to the U.A.E., but also may become an important growth point for the global semiconductor industry. However, the realization of this grand blueprint still needs to overcome many difficulties, including technical, financial, human and political challenges. We look forward to this plan gradually becoming a reality and injecting new vitality into the development of the global semiconductor industry.
