Two of the world’s largest chipmakers, Taiwan Semiconductor Manufacturing Co. (2330.TW) and Samsung Electronics (005930.KS), are in talks to build major semiconductor factories in the United Arab Emirates (UAE) to meet the surging demand for AI computing power, according to the Wall Street Journal.

Top executives from TSMC, the world’s leading chipmaker, have recently visited the UAE to discuss constructing a plant complex that could rival the company’s advanced facilities in Taiwan. Similarly, South Korea-based Samsung Electronics has also sent senior representatives to the Middle Eastern nation to explore potential chip-making operations. Both companies’ projects could exceed $100 billion in costs.

However, these discussions are still in the early stages, and significant technical and logistical challenges remain. Large-scale semiconductor manufacturing requires advanced infrastructure, skilled labor, and close proximity to suppliers—factors the UAE currently lacks.

The UAE is positioning itself as a regional hub for AI technology, with plans to reduce its dependence on petrochemicals. Abu Dhabi’s sovereign wealth fund, Mubadala, which owns a majority stake in GlobalFoundries, may play a central role in funding the potential projects.

In addition to the chipmaking discussions, the UAE’s push into AI has attracted significant investments, including a $1.5 billion deal with Microsoft and partnerships with Nvidia and OpenAI. However, Washington has expressed concerns about the UAE’s increasing involvement in advanced U.S. AI technology, especially regarding potential ties with China.

The projects in the UAE, if realized, could significantly boost global chip production while balancing the need to manage pricing and profitability for the chipmakers.