According to media reports quoted by informed sources, Taiwan Semiconductor (TSM.US) and Samsung Electronics (SSNLF.US) are discussing the construction of a large chip factory in the United Arab Emirates in the coming years to meet the growing demand for artificial intelligence computing.

The report stated that executives from Taiwan Semiconductor recently visited the United Arab Emirates to discuss the construction of a comprehensive factory that can rival Taiwan Semiconductor's advanced facilities in China's Taiwan. The report quoted another person familiar with Samsung Electronics' strategy as saying that Samsung Electronics has also sent relevant personnel to the United Arab Emirates to discuss significant new business in the country.

The report added that the discussions are still in the early stages and considering the range of technological and other obstacles these projects may face, they may not succeed. The report pointed out that the projects under consideration may require over 100 billion US dollars in investment.

The United Arab Emirates is striving to become a regional center and testbed for artificial intelligence. More broadly, Gulf countries have been working to reduce their reliance on petrochemical products. They have seen the semiconductor industry as a growth opportunity for over a decade. For example, Mubadala Investment, the United Arab Emirates' Mubadala Investment Company, is a major shareholder of GlobalFoundries (GFS.US).

However, these efforts have been challenging partly due to the lack of necessary infrastructure in the Gulf region to demonstrate the viability of building chip factories, which require billions of dollars for construction and equipment - and quickly become outdated if not updated. Chip manufacturers prefer to build factories in clusters, so they can leverage skilled workforce, existing infrastructure, and proximity to suppliers and support.

G42, an artificial intelligence company based in Abu Dhabi, is at the forefront of driving artificial intelligence in the United Arab Emirates. Last week, Nvidia announced a collaboration with G42 to create a climate technology laboratory. According to a statement, the two companies will work together to develop artificial intelligence that improves weather forecasting accuracy. They will rely on Nvidia's climate digital twin cloud platform, Earth-2, which aims to help scientists and researchers better understand and predict the impact of climate change by using high-precision simulation and visualization technology, thereby reducing economic losses caused by extreme weather.

In addition to Nvidia, Microsoft announced that it will collaborate with G42 to establish an artificial intelligence research institute. The two companies will open two centers in Abu Dhabi to carry out "responsible" AI projects. Both companies stated that this transaction is based on the partnership established in April, and as part of this partnership, Microsoft will invest $1.5 billion in G42. G42 has also established a partnership with OpenAI, which is seeking expansion in the Gulf region.