TSMC reopening discussions with Washington to build chip manufacturing plant in UAE — report

Taiwan Semiconductor Manufacturing Corporation (TSMC) is reportedly in talks with White House officials to discuss the possibility of opening a chip fab in the United Arab Emirates (UAE). According to Bloomberg, the company has met several times with U.S. special envoy to the Middle East Steve Witkoff, alongside state-owned investment firm MGX, discussing plans to invest and build a plant in the country. This site would be of similar scale and size to the one the chip maker is building in Arizona, but no further details have been publicly discussed yet.

This isn’t the first time that a chip maker has explored putting up a megafactory in the UAE — both Samsung and TSMC have each considered putting up their own facilities in the country in the third quarter of 2024, with senior executives from both companies visiting the area to start discussions. TSMC even went as far as starting talks with the Biden administration, which, unfortunately, led nowhere.

Sources say that Washington wanted to have sovereign control over the site, which apparently was not acceptable to the UAE government. Aside from that, the senior officials in the Trump government have two major concerns about the proposal: the first one being its negative effect on the Arizona project. The chipmaker has pledged $165 billion to expand the site, with $42 billion to be spent in 2025 alone. It’s also not just about finances — the UAE does not have a ready supply of professionals capable of building and running the factory, so TSMC would have to pull out personnel from other locations. This could potentially affect operations in the U.S., especially if it loses key people to the Middle East plant.

The second, more serious concern was national security. Although the UAE currently has close relations with the U.S. - China and Iran have significant influence in the region, too. If the geopolitical weather changes and the country switches allegiance, having a chip factory outside of Washington’s direct control would make it easier for its adversaries to acquire the most advanced chips that America has been trying so hard to keep them from.

Nevertheless, the UAE is still pushing hard to become a regional tech giant in the Middle East. It has already secured approval from the U.S. to acquire Nvidia AI GPUs through G42, its homegrown AI datacenter company. More recently, OpenAI announced that it will expand Stargate AI infrastructure in the country, with plans to build a 1 GW data center in Abu Dhabi.

Despite the concerns of some high-ranking officials, the UAE is still pushing hard to have its own advanced chip fab in the country. Trump’s AI and Crypto Czar, David Sacks, was reportedly open to the idea, saying that the U.S. should spread its AI technology aggressively around the globe, or else it risks losing the market to Chinese companies.

However, there haven’t been any further discussions about the topic yet. When asked about this possibility, TSMC told Bloomberg that it does not comment on rumors, while the White House and the office of the U.S. special envoy to the Middle East did not address the inquiries. The UAE’s Ministry of Foreign Affairs and MGX also did not answer any questions about the issue.

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