TSMC (TSMC) Eyeing Middle East Expansion but Geopolitical Hurdles Abound

According to a May 30 report from Bloomberg, Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is evaluating the potential for establishing an advanced semiconductor manufacturing facility in the United Arab Emirates (UAE). While discussions are still in the exploratory stage, the proposed project would represent a significant expansion of TSMC’s international footprint, particularly toward the Middle East.

Interestingly, early-stage discussions about such a project began during President Biden’s administration, but reportedly lost momentum due to the strict conditions imposed by the U.S.. Bloomberg also notes that TSMC executives visited the UAE last year to assess the feasibility of such an expansion. Talks have reportedly resumed under the Trump administration.

An aerial view of a bustling semiconductor production zone showcasing the company’s integrated circuits.

From a geopolitical perspective, the proposal encompasses several complexities. While the UAE offers compelling incentives, such as abundant energy, capital, and a willingness to invest, it currently lacks a sufficiently skilled semiconductor workforce. On the other hand, U.S. policymakers remain divided on this issue, given their concerns about potential security risks stemming from the UAE’s ties with China and Iran.

Another potential complication is the impact on TSMC’s ongoing U.S. operations—particularly the Phoenix, Arizona plant, which has been touted as a cornerstone of Washington’s semiconductor reshoring strategy. That site is supported by $6.6 billion in federal subsidies under the CHIPS Act. A UAE-based fab could risk diverting capital or management attention away from the Arizona project, potentially slowing progress on a plant seen as central to U.S. national interests.

For TSMC, which has historically concentrated its operations in Taiwan, the move would be consistent with its broader global diversification strategy, following recent expansions into Japan, Germany, and the U.S. However, any progress on a UAE-based facility would likely require approval from the U.S. government and face significant scrutiny.

As of now, none of the involved parties have officially commented. In response to Bloomberg’s inquiry, a TSMC spokesperson said the company does not comment on market rumors. Officials from both the U.S. and UAE governments have not responded to requests for comment.

Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is the world’s largest and most advanced semiconductor foundry. In contrast to integrated device manufacturers (IDMs) such as Intel, TSMC operates exclusively as a pure-play foundry, focusing on high-performance semiconductor fabrication rather than designing its own chips.

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