Production in the Middle East TSMC has Plans for a Gigafab in the United Arab Emirates

Since the Biden administration, TSMC officials have reportedly been in talks with the United Arab Emirates, with support from U.S. government representatives. They aim to build a Gigafab in the Middle East, but there are security concerns.

The world's largest contract manufacturer, Taiwan Semiconductor Manufacturing Company, more commonly known as TSMC, has primarily focused on manufacturing in Taiwan since its founding in 1987. However, for years the company has been striving to establish production sites outside of Taiwan, such as in the USA in Arizona, in Japan under the name JASM, or in Germany with the joint venture ESMC, involving Bosch, NXP, and Infineon. And TSMC apparently has further expansion plans in the Middle East.

As reported by Bloomberg based on anonymous sources (via Taipei Times), substantial investments are planned in the United Arab Emirates (UAE), similar in scale to those in Arizona. This implies that a gigafab with six plants could be established in the Middle East; it is speculated that TSMC might be willing to spend between 150 and 200 billion US dollars on such a project. The rumor of a TSMC gigafab in the UAE has been confirmed neither by TSMC itself nor by the White House or the UAE Ministry of Foreign Affairs.

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According to insider reports, the following is said to have already happened: TSMC is considering building a large semiconductor factory in the United Arab Emirates (UAE) and discussions have been ongoing for months. Involved are particularly the U.S. Special Envoy for the Middle East, Steve Witkoff, and representatives from MGX, an influential investment fund controlled by the UAE leadership. Originally, these talks began under the Biden administration but were only resumed under the Trump administration.

A potential location in the UAE would be a significant step in TSMC's global expansion strategy and could underscore the Gulf state's ambitions to establish itself as a technology hub for artificial intelligence. After all, it was only a few days ago that Jensen Huang traveled to Saudi Arabia with U.S. President Trump to negotiate the delivery of around 180,000 AI GPUs.

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At the same time, the TSMC endeavor is fraught with numerous uncertainties. According to insiders, a possible start of construction could still be years in the future, and the final decision largely depends on approval from the U.S. government. However, critical voices are emerging from Washington. Some members of the Trump administration express concerns that an additional project in the UAE might divert financial or human resources from the government-supported U.S. factory in Phoenix. Furthermore, there are security policy reservations: The UAE's close ties with China and the geopolitical proximity to Iran raise fears that sensitive technological know-how could fall into strategically sensitive hands if the political balance in the region shifts.

Whether the venture will actually become a project remains uncertain, both due to geopolitical implications and the lack of skilled workforce on site. (sb)