TSMC eyes UAE for multibillion-dollar chip gigafab

Taiwan Semiconductor Manufacturing Co. (TSMC) is weighing a multibillion-dollar “gigafab” in the United Arab Emirates, a move that would extend the world’s most advanced chip-making know-how into the Gulf if Washington allows. The facility under discussion mirrors the six-plant complex the company is building in Phoenix, Arizona, and would mark TSMC’s first production footprint in the Middle East.

Negotiations have progressed through several rounds with U.S. special envoy Steve Witkoff and MGX, an investment arm overseen by the UAE president’s brother. Talks began late in the Biden administration, lost momentum, and then resumed after Donald Trump returned to the White House. Any ground-breaking remains years away and hinges on U.S. approval.

Building the Phoenix complex is already slated to cost roughly $165 billion, so a comparable UAE project would involve a similar level of capital and managerial commitment. TSMC has warned that U.S. semiconductor tariffs could push Phoenix costs higher, and some officials fear a second mega-site would further strain budgets and talent. The company has secured $6.6 billion in federal subsidies for its U.S. investments and is targeting $42 billion of spending in 2025 alone.

Senior administration figures caution that a fab on UAE soil could expose American technology to China or Iran, both of which maintain close ties in the region. Earlier, Biden officials floated strict conditions—U.S. control over a share of output during emergencies and de-facto sovereignty over the site—that Abu Dhabi deemed unacceptable, leaving the proposal in limbo.

The UAE continues to chase an AI-driven industrial strategy. It has already obtained U.S. permission to import Nvidia GPUs via local firm G42 and is hosting OpenAI’s planned “Stargate” data-center project. A TSMC fab would cap that ambition, yet the country still lacks the engineering workforce needed to run leading-edge lines, meaning specialists would have to relocate from Taiwan, the United States, or Japan.

For now, TSMC says only that it “does not comment on market rumors” and remains focused on its active expansions. White House deliberations continue, with some advisers urging broader deployment of U.S. chip technology abroad and others warning that the plan risks undercutting the very reshoring effort Washington is funding at home. Until that debate is settled, the desert fab will stay on the drawing board.