Taiwan Semiconductor Manufacturing Co. (TSMC) is reportedly exploring the possibility of building a semiconductor fabrication plant in the United Arab Emirates (UAE), while simultaneously expanding its design capabilities in Europe with a new chip design center in Munich, Germany.

According to Bloomberg and other reports, TSMC has held multiple rounds of discussions with U.S. officials, including Special Envoy to the Middle East Steve Witkoff, and MGX, a UAE-based investment firm controlled by a member of the royal family. The proposed UAE fab would be comparable in scale to TSMC's Arizona site, which is expected to cost $165 billion across six fabs.

TSMC's interest in the UAE follows earlier visits by both TSMC and Samsung executives last year to assess local potential. However, previous talks between the chipmaker and the Biden administration stalled after Washington requested control over part of the UAE fab's capacity and sought de facto sovereignty over the site—terms that were reportedly not acceptable to Abu Dhabi.

Security concerns remain a key issue. U.S. officials fear that building an advanced fab in the UAE could risk sensitive technology falling into the hands of geopolitical rivals like China or Iran, particularly if the regional balance shifts. Additionally, the UAE currently lacks a domestic semiconductor workforce, potentially forcing TSMC to divert engineers from other global operations.

Despite these concerns, the UAE has continued to push forward with ambitious plans to become a regional tech powerhouse. In recent months, it secured U.S. approval to purchase 500,000 of Nvidia's latest AI chips and partnered with OpenAI to build a large-scale AI data center in Abu Dhabi. U.S. officials noted that the UAE agreed to strengthen export controls and align its national security standards more closely with Washington.

Meanwhile, in a move reinforcing its commitment to Europe, TSMC announced it will establish a new chip design center in Munich. Scheduled to open in the third quarter of 2025, the center will focus on designing high-performance, energy-efficient chips for automotive, industrial, and AI applications.

A TSMC spokesperson cited Munich's proximity to major European clients as a key factor in the decision. The new hub will join the company's network of nine global design centers across Taiwan, China, Japan, Canada, and the U.S.

This announcement comes as the EU ramps up efforts to build a more self-reliant semiconductor supply chain. It also complements TSMC's earlier move to build a manufacturing fab in Dresden as part of a joint venture with Infineon, Bosch, and NXP.

While demand for chips used in electric vehicles and industrial machinery has weakened due to inventory buildup, TSMC is bullish on AI-related growth. The company forecasts over 20% revenue growth in 2025, driven by soaring demand for chips powering AI servers.

Together, TSMC's Middle East ambitions and its expanding European presence highlight the company's dual strategy: pushing deeper into emerging markets while strengthening ties with key global partners amid ongoing geopolitical and supply chain shifts.