Currently, the world’s semiconductor factories are concentrated in Northeast Asia, including the United States, China, Korea, and Taiwan.
In this situation, the United Arab Emirates (UAE) in the Middle East is moving to attract factories from Samsung Electronics of Korea and TSMC of Taiwan, with the goal of becoming a new semiconductor hub.
The Wall Street Journal (WSJ) reported on the 22nd (local time) that the UAE is pushing to attract semiconductor factories from Samsung Electronics of Korea and TSMC of Taiwan worth a total of 100 billion dollars (approximately 133 trillion won).
Executives from TSMC, the world’s largest foundry semiconductor manufacturer, recently visited the UAE and discussed building a factory to rival TSMC’s cutting-edge facilities in Taiwan.
In addition, Samsung Electronics of Korea recently sent a special envoy to the UAE to discuss new businesses.
Discussions are in the early stages, and given the technical and other hurdles it faces, the project may not go ahead, but if it does, it would be a massive undertaking worth more than $100 billion.
Costs have skyrocketed in recent years, with a single, cutting-edge semiconductor factory costing at least $20 billion. The megaproject being discussed in the UAE would involve multiple factories, creating a complex that would cost more than $100 billion.
According to the initial terms being discussed, the project will be funded by the UAE’s sovereign wealth fund, with Mubadala, the Abu Dhabi-based sovereign wealth fund, as the lead manager. Mubadala is one of the world’s largest sovereign wealth funds, with approximately $300 billion in assets under management.
The reason the UAE is pursuing such a large-scale project appears to be because the country has chosen artificial intelligence (AI) as its next-generation growth engine.
However, significant technical and political hurdles remain.
First of all, the biggest concern is securing clean water. Semiconductor manufacturing requires a large amount of clean water in the process of rinsing silicon wafers.
However, the UAE is a water-scarce country, and most of its water is supplied by seawater desalination. As a result, semiconductor production requires significant purification.
In addition, it is not easy for Korea and Taiwan to dispatch top-tier technical personnel to places far from their home base.
The biggest problem of all is the United States. The United States is desperate to strengthen the competitiveness of its own semiconductor industry, including enacting the ‘Semiconductor Act’ in 2022 and investing $39 billion in subsidies into the semiconductor industry.
In addition, China’s rise in semiconductors is being checked by restricting exports of semiconductors to the public.
The United States is concerned that semiconductors produced in the UAE are flowing into China, as the UAE is a major trading partner of China.
Samsung Electronics and TSMC are said to be seeking to overcome this obstacle by giving the United States oversight over shipments of semiconductors produced at their UAE factories.
Despite these obstacles, the UAE is pushing to attract Samsung and TSMC factories because it wants to find food after oil. The UAE is a member of the Organization of Petroleum Exporting Countries (OPEC), and its capital, Abu Dhabi, is a major producer of oil and natural gas.
But like other resource-rich countries in the region, Abu Dhabi has been pursuing industrial diversification in recent decades to hedge against the depletion of its oil resources.
Abu Dhabi is particularly ‘all-in’ on AI. In February, Sam Altman, CEO of OpenAI, said he had discussed semiconductor production for AI development with the UAE and others.
Abu Dhabi appears to be pursuing a strategy of going all-in on AI and leading the AI era.
Experts say that if the UAE succeeds in attracting factories from Samsung and TSMC, it could become a new semiconductor hub and lead governments around the world to join in, greatly contributing to the expansion of the semiconductor industry.
(Seoul = News 1)
2024-09-24 10:55:40