The river is sounding. And they are making it sound, no more, no less, The Wall Street Journal (TWSJ) y Reuterstwo media outlets with proven credibility. According to them, TSMC and Samsung, the two largest semiconductor manufacturers in the world along with Intel, are seriously considering the possibility of building several large, cutting-edge factories in the United Arab Emirates (UAE). However, according to these sources, this is not a joint project; each of these companies has its own plan.
TWSJ reports that several senior TSMC officials have recently visited the UAE to explore the possible expansion of its manufacturing infrastructure. In fact, the outlet predicts that the Taiwanese company is considering building a campus with several state-of-the-art plants comparable to the largest ones it has in its home country. The total investment could exceed $100 billion.
A priori, and given TSMC’s interest in expanding its infrastructure, this strategy does not seem at all far-fetched. In fact, it is currently building several factories in Taiwan, the US and Japan, and work should soon begin on its Magdeburg plant (Germany). However, there is one strange point in all this: TSMC executives are conservative and have so far reserved their most advanced technologies exclusively for Taiwan. It would be strange, although not impossible, for them to build factories in the UAE comparable to their best Taiwanese plants.
Why United Arab Emirates
Surprisingly, again according to TWSJ, Samsung is planning to take the same step as TSMC. What is surprising is not that this South Korean company is interested in expanding in the UAE; what is curious is that its plan coincides in time with an essentially identical project by TSMC. Whatever the case, according to sources of the newspaper TWSJ, several Samsung executives have recently visited this Middle Eastern country in order to explore what expansion options they have. And, apparently, they have many. The reason is very compelling: the UAE government seems to be willing to take charge of the financing of these mega-factories.
The UAE’s interest may explain the coincidence in timing of TSMC and Samsung’s plans if we consider the possibility that both projects are an initiative of this Middle Eastern country.
In fact, the UAE government’s interest may explain the coincidence in time of the plans of TSMC and Samsung if we consider the possibility that both projects are an initiative of this Middle Eastern country. At this point it is reasonable to ask ourselves why this Arab state is determined to spend this much money on two foreign companies. The answer is simple: like Saudi Arabia, the UAE needs to diversify its economy in anticipation of the very probable loss of relevance of oil in the medium term. And technology in the current situation is a safe bet.
The growth potential of the semiconductor industry is also staggering. We only need to look at the market for artificial intelligence (AI) hardware to see this. According to the consulting firm AMR (Allied Market Research), the market for chips for AI applications will have a turnover of more than 263 billion dollars in 2031. This is a real outrage, especially when you consider that in 2021 its business amounted to just over 11 billion dollars.
In this scenario, all three players win. The UAE is spending a fortune, yes, but it has the capacity to afford this investment. It also allows it to reorient its economy in an extraordinarily solid direction. And, of course, TSMC and Samsung win. As I mentioned a few lines above, these two companies have not yet made anything official, but both projects seem credible. After all, these two companies have an ambitious plan to expand their manufacturing infrastructure.
Image | TSMC
More information | The Wall Street Journal | Reuters
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