Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) and Samsung Electronics (SSNLF.US) are considering building a new chip factory in the United Arab Emirates.

According to media reports citing informed sources, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) and Samsung Electronics (SSNLF.US) are discussing the construction of a large chip factory in the United Arab Emirates in the coming years to meet the growing demand for artificial intelligence computing. The report stated that executives from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR recently visited the UAE to discuss the construction of a comprehensive factory in the country that could rival Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's advanced facilities in Taiwan. The report quoted another source familiar with Samsung Electronics' strategy as saying that Samsung Electronics has also sent relevant personnel to the UAE to discuss major new business opportunities in the country. The report added that the discussions are still in the early stages, and considering the various technical and other obstacles these projects may face, they may not succeed. The report noted that the projects under consideration may require an investment of over $100 billion. The UAE is striving to become a regional hub and testing ground for artificial intelligence. More broadly, Gulf countries have been working to reduce their dependence on petrochemical products. For over a decade, they have seen the semiconductor industry as a growth opportunity. For example, the UAE's Mubadala Investment Company is a major shareholder in GlobalFoundries (GFS.US). However, these efforts have been challenging, in part because the Gulf region lacks the necessary infrastructure to justify the construction of chip factories, which require billions of dollars to build and equip and if not updated, they quickly become outdated. Chip manufacturers prefer to build factories in clusters, so they can leverage skilled labor, existing infrastructure, and proximity to suppliers and support. G42, an Abu Dhabi-based UAE artificial intelligence company, is at the core of driving artificial intelligence in the country. Last week, NVIDIA Corporation announced a partnership with G42 to create a climate technology laboratory. According to a statement, the two companies will work on developing artificial intelligence that can improve weather forecasting accuracy. They will rely on NVIDIA Corporation's Earth-2 climate digital twin platform, which aims to help scientists and researchers better understand and predict the impacts of climate change through high-precision simulation and visualization technologies, thus reducing economic losses caused by extreme weather. In addition to NVIDIA Corporation, Microsoft Corporation announced a collaboration with G42 to establish an artificial intelligence research institute, with the two companies opening two centers in Abu Dhabi to conduct "responsible" artificial intelligence projects. The companies stated that this deal builds on their partnership established in April, under which Microsoft Corporation will invest $1.5 billion in G42. G42 has also partnered with OpenAI, which is seeking to expand in the Gulf region.