Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker, has reaffirmed its stance on no new overseas investment plans in response to recent reports suggesting discussions with Samsung for building large chip factories in the United Arab Emirates (UAE). According to a report by The Wall Street Journal, TSMC and Samsung had discussed plans to construct advanced chip manufacturing facilities in the UAE, with potential costs exceeding $100 billion. The proposed projects would be funded by the UAE, with one of the country’s sovereign wealth funds, Mubadala, playing a key role.
Despite the significant investment required to build and maintain state-of-the-art semiconductor manufacturing plants, which can cost hundreds of billions of dollars, TSMC stated that it is currently focused on its existing global layout. In a statement, TSMC expressed its openness to constructive discussions that promote the semiconductor industry, but confirmed that it has no concrete plans for new overseas investments at present.
The reports from The Wall Street Journal highlight the numerous technical and political challenges TSMC and Samsung face in the UAE. One of the primary technical hurdles is the requirement for ultra-pure water, a critical component in the manufacturing process. Most of the UAE’s water is produced through desalination, which is not suitable for chip manufacturing without further purification. This purification process is crucial for the washing of wafers after etching, to remove any residual solutions such as hydrofluoric acid.
In addition to the technical challenges, political concerns also loom large. US officials are wary of advanced chips produced in the UAE being transported to competitor nations. TSMC is currently expanding its global footprint, with ongoing construction of plants in Arizona, Germany, and Japan. The first factory in Kumamoto, Japan, is expected to begin production of 12nm, 16nm, 22nm, and 28nm chips this quarter, while the Arizona facility is scheduled to start producing 4nm chips next year. The German facility is set to commence production in 2027.
Amid growing geopolitical uncertainties, both the US and Europe have introduced their respective semiconductor bills to support local chip industries. As the world leader in semiconductor manufacturing, TSMC has become a key target for these efforts. The UAE, on the other hand, is aspiring to become a significant hub in the global semiconductor industry. In February, reports indicated that OpenAI CEO Sam Altman had discussed with investors from the UAE and elsewhere the possibility of establishing a chip network, with potential investments in the trillions.
This situation underscores the complex interplay of economic and political factors in the global semiconductor landscape. While TSMC continues to expand its global presence, the UAE’s ambitions for a prominent role in the semiconductor industry remain unfulfilled for now. The technical and political challenges highlight the difficulties in establishing such large-scale manufacturing facilities in new regions.
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