Key Takeaways
1. TSMC is considering building a multibillion-dollar “gigafab” in the UAE, which would be its first manufacturing site in the Middle East.
2. Ongoing negotiations involve U.S. approvals, with discussions starting during the Biden administration and fluctuating during Trump’s presidency.
3. A similar facility to the Phoenix complex would require significant financial investment, with concerns about costs and talent attraction.
4. U.S. officials worry about security risks associated with technology exposure to China and Iran, complicating project approvals.
5. The UAE lacks a skilled engineering workforce for advanced manufacturing, requiring specialists to relocate, while TSMC focuses on current expansions.
Taiwan Semiconductor Manufacturing Co. (TSMC) is considering a multibillion-dollar “gigafab” in the United Arab Emirates. This move could bring the most advanced chip-making technology to the Gulf region, depending on U.S. approval. The proposed facility is similar to the six-plant complex being built in Phoenix, Arizona, and would represent TSMC’s first manufacturing presence in the Middle East.
Ongoing Negotiations
Discussions have progressed through multiple rounds involving U.S. special envoy Steve Witkoff and MGX, an investment group managed by the UAE president’s brother. These talks began during the Biden administration, slowed down, and then picked up again after Donald Trump returned to office. However, any groundbreaking for the UAE facility is still years away and relies heavily on U.S. permissions.
Financial Commitments
The Phoenix complex is projected to cost around $165 billion, so a similar project in the UAE would require a comparable amount of investment and management resources. TSMC has indicated that U.S. semiconductor tariffs could increase costs for the Phoenix site. Additionally, some officials worry that having another mega-site could further challenge budgets and attract talent. The company has already received $6.6 billion in federal subsidies for its U.S. projects and aims to spend $42 billion in 2025 alone.
Security Concerns
Higher-ups in the administration express concerns that a fab in the UAE could risk exposing American technology to China or Iran, both of which have strong relationships in the region. Earlier discussions from Biden’s team proposed strict conditions, such as U.S. control over part of the output during emergencies and effective sovereignty over the site. Abu Dhabi found these terms unacceptable, leaving the project uncertain.
The UAE is still pursuing an AI-driven industrial strategy. It has received U.S. approval to import Nvidia GPUs through a local company, G42, and is hosting OpenAI’s forthcoming “Stargate” data-center project. A TSMC fab would bolster this ambition, but the country currently lacks the skilled engineering workforce needed to operate advanced manufacturing lines, which means specialists would have to move from Taiwan, the U.S., or Japan.
At this moment, TSMC has stated that it “does not comment on market rumors” and is concentrating on its ongoing expansions. The White House is still deliberating, with some advisers advocating for the broader use of U.S. chip technology internationally while others caution that this plan could undermine the reshoring efforts that Washington is supporting domestically. Until this debate is resolved, the desert fab will remain just a concept.
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