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.

After two years of decline, the worldwide traditional PC market returned to growth during the first quarter of 2024 (1Q24) with 59.8 million shipments, growing 1.5% year over year, according to preliminary results from the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker. Growth was largely achieved due to easy year-over-year comparisons as the market declined 28.7% during the first quarter of 2023, which was the lowest point in PC history. In addition, global PC shipments finally returned to pre-pandemic levels as 1Q24 volumes rivaled those seen in 1Q19 when 60.5 million units were shipped.

With inflation numbers trending down, PC shipments have begun to recover in most regions, leading to growth in the Americas as well as Europe, the Middle East, and Africa (EMEA). However, the deflationary pressures in China directly impacted the global PC market. As the largest consumer of desktop PCs, weak demand in China led to yet another quarter of declines for global desktop shipments, which already faced pressure from notebooks as the preferred form factor.

Japanese tech billionaire and founder of the SoftBank Group, Masayoshi Son, is embarking on a hugely ambitious new project to build an AI chip company that aims to rival NVIDIA, the current leader in AI semiconductor solutions. Codenamed "Izanagi" after the Japanese god of creation, Son aims to raise up to $100 billion in funding for the new venture. With his company SoftBank having recently scaled back investments in startups, Son is now setting his sights on the red-hot AI chip sector. Izanagi would leverage SoftBank's existing chip design firm, Arm, to develop advanced semiconductors tailored for artificial intelligence computing. The startup would use Arm's instruction set for the chip's processing elements. This could pit Izanagi directly against NVIDIA's leadership position in AI chips. Son has a chest of $41 billion in cash at SoftBank that he can deploy for Izanagi.

Additionally, he is courting sovereign wealth funds in the Middle East to contribute up to $70 billion in additional capital. In total, Son may be seeking up to $100 billion to bankroll Izanagi into a chip powerhouse. AI chips are seeing surging demand as machine learning and neural networks require specialized semiconductors that can process massive datasets. NVIDIA and other names like Intel, AMD, and select startups have capitalized on this trend. However, Son believes the market has room for another major player. Izanagi would focus squarely on developing bleeding-edge AI chip architectures to power the next generation of artificial intelligence applications. It is still unclear if this would be an AI training or AI inference project, but given that the training market is currently bigger as we are in the early buildout phase of AI infrastructure, the consensus might settle on training. With his track record of bold bets, Son is aiming very high with Izanagi. It's a hugely ambitious goal, but Son has defied expectations before. Project Izanagi will test the limits of even his vision and financial firepower.

Every country needs to own the production of their own intelligence, NVIDIA founder and CEO Jensen Huang told attendees Monday at the World Governments Summit in Dubai. Huang, who spoke as part of a fireside chat with the UAE's Minister of AI, His Excellency Omar Al Olama, described sovereign AI—which emphasizes a country's ownership over its data and the intelligence it produces—as an enormous opportunity for the world's leaders. "It codifies your culture, your society's intelligence, your common sense, your history - you own your own data," Huang told Al Olama during their conversation, a highlight of an event attended by more than 4,000 delegates from 150 countries.

"We completely subscribe to that vision," Al Olama said. "That's why the UAE is moving aggressively on creating large language models and mobilizing compute." Huang's appearance in the UAE comes as the Gulf State is moving rapidly to transform itself from an energy powerhouse into a global information technology hub. Dubai is the latest stop for Huang in a global tour that has included meetings with leaders in Canada, France, India, Japan, Malaysia, Singapore and Vietnam over the past six months. The Middle East is poised to reap significant benefits from AI, with PwC projecting a $320 billion boost to the region's economy by 2030.

Various news outlets have been keeping tabs on OpenAI's CEO—Sam Altman—the AI technology evangelist was reported to be pursuing an ambitious proprietary AI chip project in early 2024. Inside sources pointed to late-January negotiations with important investment personnel in the Middle East—many believe that OpenAI leadership is exploring the idea of establishing its own network of semiconductor production plants. Late last week, The Wall Street Journal followed up on last month's AI industry rumors: "(Altman) has another great ambition: raising trillions of dollars to reshape the global semiconductor industry. The OpenAI chief executive officer is in talks with investors including the United Arab Emirates government to raise funds for a wildly ambitious tech initiative that would boost the world's chip-building capacity, expand its ability to power AI." One anonymous insider reckons that "the project could require raising as much as $5 trillion to $7 trillion."

TSMC is reportedly in the equation—Altman allegedly conducted talks with top brass last month—their expertise in cutting edge fabrication techniques would be of great value, although it is somewhat futile to reveal too many industry secrets given the sheer scale of OpenAI's (reported) aggressive expansion plans. The Wall Street Journal (WSJ) suggests that the embryonic venture is far more "open" than previously reported—a collaborative venture could be established once funding is secured, although Altman & Co. face "significant obstacles" en route. WSJ proposes that the somewhat OpenAI-centric fabrication network is best founded by a joint partnership—involving multiple investors, contract chip manufacturers (perhaps TSMC), and energy/power providers. OpenAI appears to be the "primary buyer" of resultant fabricated AI chips, with manufacturing services also offered to other clients. The scale of such an endeavor is put into perspective by WSJ's analysis (via inside sources): "Such a sum of investment would dwarf the current size of the global semiconductor industry. Global sales of chips were $527 billion last year and are expected to rise to $1 trillion annually by 2030. Global sales of semiconductor manufacturing equipment—the costly machinery needed to run chip factories—last year were $100 billion, according to an estimate by the industry group SEMI."