TSMC and Samsung Consider Building $100 Billion Semiconductor Facilities in Middle East

[AleksandarK]

TSMC and Samsung are reportedly in talks with the United Arab Emirates (UAE) to establish chip factories in the Gulf nation. As reported by the Wall Street Journal, this "desert dream" aligns with the UAE's ambitious plans to diversify its economy beyond oil and become a key player in the AI sector by building chips for AI domestically. The UAE and neighboring Saudi Arabia plan to leverage their oil wealth to invest in cutting-edge manufacturing, with AI emerging as a primary focus due to its high computational demands. Successful implementation of chip factories could significantly boost the region's AI capabilities and impact the global semiconductor supply chain. However, the project faces substantial challenges. Previous attempts to establish semiconductor manufacturing in the Gulf, such as the GlobalFoundries initiative over a decade ago, have yet to progress beyond initial planning.

The current proposal faces even greater obstacles, with estimated costs exceeding $100 billion for a state-of-the-art facility and necessary infrastructure. Geopolitical concerns add another layer of complexity. Recent US export restrictions of certain chips to the Gulf region may complicate the transfer of advanced manufacturing processes to the UAE. Despite these hurdles, the potential benefits are significant. For the UAE, success would represent a major step towards economic diversification and technological leadership. TSMC and Samsung could gain a strategic presence in a region eager for technological advancement. TSMC noted that the company focuses on current expansion projects in the US, Japan, and Germany, while Samsung declined to comment.



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[phanbuey]

Would be nice to know what node these are slated to be. TSMC foreign fab "state of the art" usually means 12nm and up - they're just now looking at a 6nm fab in Japan.

 

[TumbleGeorge]

It comes to mind that a 12"nm factory cannot cost 100+ billion.

 

[R0H1T]

This is beyond stupid, where do these MBA hacks think demand will come from "AI" or FSD Teslas or maybe Apple Vision

 

[dragontamer5788]

As much as TSMC needs to diversify out of Taiwan due to geopolitical issues... the Middle East is one of the few places less-stable / more hot / more war than the expected Taiwan situation over the next decade. UAE is sitting across from Iran and is reasonably close to Yemen/Houthis. I wish them luck on their investments.

I guess its good for UAE overall though, and if TSMC is willing to risk it then its still one additional location to secure chips. War is less likely to breakout in two places than just one place after all. But I wouldn't call it a geopolitical win given how hot this region is.

The Saudis / UAE have been trying for decades to reach an advanced economy where they stop relying upon oil as their main income. I welcome these attempts and recognize this kind of ambition to be beneficial to the world. But it doesn't change the geopolitical reality of their neighbors or the risks in placing $100 Billion factories in such a hot region.

 

[bug]

They can build it anywhere they want. But who would staff a fab in UAE? They're not exactly known for their chip-building prowess...

 

[Daven]

They can build it anywhere they want. But who would staff a fab in UAE? They're not exactly known for their chip-building prowess...

The middle east is almost exclusively foreign labor across all industries. In UAE in particular, the natives are mostly wealthy so importing labor is important to them for avoiding menial labor.

 

[Space Lynx]

This is beyond stupid, where do these MBA hacks think demand will come from "AI" or FSD Teslas or maybe Apple Vision

Yep, I agree, there is a huge overestimation of demand because Covid gave a false outlook of what would be needed when everyone was required to stay home. Also, laptops are going to last a longer these days, etc. I have a 4nm 7840u work laptop and linux mint runs amazing on it. I don't see changing it for ten+ years, maybe longer. when battery starts to fail, if I can't find a decently priced replacement, i will just remove the battery and use it in wired only mode, meh.

Not sure where all this silicon is going to go. Makes sense in a world where everyone upgrades every year or two, but those days are behind us. Desktop, phones, laptops, etc. I buy for several years now, and I have a feeling this is the new trend among majority of people.

 

[Shihab]

This is beyond stupid, where do these MBA hacks think demand will come from "AI" or FSD Teslas or maybe Apple Vision

Doesn't take an MBA to think that perhaps the fact that American and EU suits pouring billions of tax payers dollars into this game means you should consider doing the same.
And yes, "AI" is driving demand. Opinions on how much of a joke it is currently being implemented (and those I have plenty of) are irrelevant.

But it doesn't change the geopolitical reality of their neighbors or the risks in placing $100 Billion factories in such a hot region.

The power differential between Saudi/UAE and Iran is the reverse of that between China-Taiwan. There is as much risk a significant conflict erupts there as that of the ridiculous plot of Homefront (the game) becoming a reality. Saudi and UAE are very stable countries. With exception to the former's southern borders, they haven't really seen much conflict since the 19/20th centuries. Having enough guns (and foreign support) ensures that things remain as such for the foreseeable future.

They can build it anywhere they want. But who would staff a fab in UAE? They're not exactly known for their chip-building prowess...

Read some articles a few days ago about Brits throwing a fit about their engineers pulling a Wilfred Thesiger and setting sail to Arabia. So...

 

[Space Lynx]

Doesn't take an MBA to think that perhaps the fact that American and EU suits pouring billions of tax payers dollars into this game means you should consider doing the same.
And yes, "AI" is driving demand. Opinions on how much of a joke it is currently being implemented (and those I have plenty of) are irrelevant.

The power differential between Saudi/UAE and Iran is the reverse of that between China-Taiwan. There is as much risk a significant conflict erupts there as that of the ridiculous plot of Homefront (the game) becoming a reality. Saudi and UAE are very stable countries. With exception to the former's southern borders, they haven't really seen much conflict since the 19/20th centuries. Having enough guns (and foreign support) ensures that things remain as such for the foreseeable future.


Read some articles a few days ago about Brits throwing a fit about their engineers pulling a Wilfred Thesiger and setting sail to Arabia. So...

There just isn't enough power grid energy imo to throw around on AI like people are wanting to do. I still can't believe Microsoft is restarting the three mile island nuclear reactors... what an insane timeline to be alive. I'm all for building new safe nuclear like Bill Gates is doing in Wyoming, but to re-open an ancient problematic site just out of pure greed for your CoPilot AI energy source, can't believe government is letting them do it. Insane.

 

[JohH]

Here the water will be from desalination plants - which is significantly more energy intense than merely filtering and safely recycling water.

 

[Space Lynx]

Here the water will be from desalination plants - which is significantly more energy intense than merely filtering and safely recycling water.

We are literally the dumbest and most inefficient species alive. I'm afraid to re-watch Into the Wild again, it might finally convince me to yolo into a cabin in the deep woods and just read books and live simply. If I do it, I am getting those Costco 25 year shelf life food crates though, stored in a second cabin next to my living cabin, cause I ain't about to starve.

 

[Shihab]

There just isn't enough power grid energy imo to throw around on AI like people are wanting to do.

I still can't believe Microsoft is restarting the three mile island nuclear reactors... what an insane timeline to be alive. I'm all for building new safe nuclear like Bill Gates is doing in Wyoming

You replied to yourself there, bro.

It's idiotic. And I don't see most of it better than the menace that is cryptocurrency. But where money is involved, "shouldn't do this" is a conclusion that depends only on the RoI.

 

[john_]

AI chips on Chinese missiles are danger. So let's put some cutting edge AI chips on Houthi missiles.
This isn't a political comment, I know the rules, it just doesn't makes sense to build it there. It's a hot area and tomorrow no one says that the whole region will not be anti-West. I think the only way they can lure TSMC or Samsung to move high end equipment there, is if they take over the whole cost of the fab. And even then I do expect US to try to convince TSMC and Samsung to avoid building there.

 

[bug]

AI chips on Chinese missiles are danger. So let's put some cutting edge AI chips on Houthi missiles.
This isn't a political comment, I know the rules, it just doesn't makes sense to build it there. It's a hot area and tomorrow no one says that the whole region will not be anti-West. I think the only way they can lure TSMC or Samsung to move high end equipment there, is if they take over the whole cost of the fab. And even then I do expect US to try to convince TSMC and Samsung to avoid building there.

Of the whole Middle East, I think only Israel has better relations with US/EU than UAE. It's still only a stone throw away from Iran.

 

[john_]

Yep, I agree, there is a huge overestimation of demand because Covid gave a false outlook of what would be needed when everyone was required to stay home. Also, laptops are going to last a longer these days, etc. I have a 4nm 7840u work laptop and linux mint runs amazing on it. I don't see changing it for ten+ years, maybe longer. when battery starts to fail, if I can't find a decently priced replacement, i will just remove the battery and use it in wired only mode, meh.

Not sure where all this silicon is going to go. Makes sense in a world where everyone upgrades every year or two, but those days are behind us. Desktop, phones, laptops, etc. I buy for several years now, and I have a feeling this is the new trend among majority of people.

In every sci fi movie you will see the protagonists living in an environment full with every kind of electronic devices. We are moving in that direction, so yes, in 50-100 years there will be huge demand for equipment. I mean, in the 80's people would have been laughing and thinking that it is stupid to build factories that each produce hundred of millions of CPUs every year, but here we are with a high end CPU in almost everyone's pocket. And while hardware from 10 years ago could be used today easily and offer a mostly smooth experience for usual tasks, most people do replace whole devices ignoring or not caring if their current laptop/smartphone can keep doing the job with minimal maintenance and upgrades if available. If someone could push a magic button and insert in every consumers' mind the average knowledge of how to maintain, fix and upgrade a laptop, the laptop market would collapse the next day. But people don't know and many don't even care to learn because they would prefer to buy a new device even if that new device doesn't really offer much more compared to the old one. They just want something new. I think that's why they want to throw those 100 billions in a new factory in their area. Not to mention that high tech might be the oil of the future. The one having top equipment might be the one who solves problems first, gets all the money. I am pretty sure they know in UAE that in a digital future if they don't have direct access to the best equipment, they will eventually lose and go back being a desert.

Of the whole Middle East, I think only Israel has better relations with US/EU than UAE. It's still only a stone throw away from Iran.

It's a small country. People could revolt, for some reason, another country invade for some reason (yes, the last time something like that happened down there, it didn't gone well for the invader), or simply a future king/prince whatever could have very negative feelings for the west and decide to make alliances with others.

 

[mechtech]

$100 billion?!?!

Solid gold toilet included??

There just isn't enough power grid energy imo to throw around on AI like people are wanting to do. I still can't believe Microsoft is restarting the three mile island nuclear reactors... what an insane timeline to be alive. I'm all for building new safe nuclear like Bill Gates is doing in Wyoming, but to re-open an ancient problematic site just out of pure greed for your CoPilot AI energy source, can't believe government is letting them do it. Insane.

Well not that long ago, there was a nuke plant called Chernobyl, a large % of its output was just to power an air/missile radar. A nuke site needs lots of employees, so easy to see the government green lighting it. Probably need another 1/2 dozen governing/regulating bodies like WANO, etc. to give the ok as well. Typically, you're not allowed to do nuclear unless you can do it safely.

 

[Prima.Vera]

100 billion is more than the GDP of some countries in the world...

 

[RandallFlagg]

Oh right.

Here ya go TSMC. A list of promising locations for your next fab.

List of active volcanoes - Simple English Wikipedia, the free encyclopedia

simple.wikipedia.org

 

[Shihab]

So let's put some cutting edge AI chips on Houthi missiles

Sounds like the premise of a Clancy-wannabe fiction for people who have absolutely no clue of the real life setting...
This statement makes as much sense as saying chips act would boost Russian Migs (perhaps even less).

 

[john_]

Sounds like the premise of a Clancy-wannabe fiction for people who have absolutely no clue of the real life setting...
This statement makes as much sense as saying chips act would boost Russian Migs (perhaps even less).

You are thinking today, not tomorrow.

 

[Shihab]

You are thinking today, not tomorrow.

Tomorrow is the result of today and yesterday. Prediction 101.

 

[john_]

Tomorrow is the result of today and yesterday. Prediction 101.

I guess if you are missing the specific tree, the best thing to do is point at the whole forest. Can't lose.

 

[RUSerious]

It comes to mind that a 12"nm factory cannot cost 100+ billion.

Thought the same. The answer is here:

with estimated costs exceeding $100 billion for a state-of-the-art facility and necessary infrastructure.

The infrastructure, for a chip making project in the middle east, will be astronomically expensive. I assume that the UAE would be ponying up a most of that bill.