What just happened? TSMC is once again in talks with US officials about a potential advanced chip factory in the United Arab Emirates. The plan has been floated before under the Biden administration, but now it appears to have gained new life following recent conversations between TSMC, the Trump administration, and UAE representatives.

A Bloomberg report, citing sources familiar with the matter, highlights that the proposed plant would be a gigafab, essentially a sprawling complex of multiple chipmaking facilities. If it comes to pass, it would represent a massive leap in the UAE’s ambitions to become a key player in this field, even though it currently lacks skilled semiconductor labor.

TSMC has reportedly met several times in recent months with Steve Witkoff, the US Special Envoy to the Middle East, and MGX, a powerful UAE investment fund tied to the ruling family. The renewed interest comes amid broader negotiations around AI cooperation between the two countries.

Still, don’t expect bulldozers on the ground anytime soon. The idea is still in early-stage talks, and whether it advances at all hinges on how the US feels about it, particularly given the national security and economic implications.

Critics inside the administration point to the UAE’s ties to China and the risk of future technology transfers. AI data centers can be more easily regulated through licensing and oversight, but a chip manufacturing plant would create a pipeline of advanced know-how and local production that the US could lose control over.

It’s worth mentioning that TSMC is already investing heavily in the US through its Arizona project, which is expected to cost $165 billion and includes fabs, research labs, and chip packaging facilities. The US committed $6.6 billion in subsidies to help make that happen as part of the CHIPS Act. But some in the Trump administration worry that spreading TSMC’s resources too thin, especially in a region with complex geopolitics like the Gulf, could backfire.

Regardless of the outcome, the UAE continues to position itself as a regional tech leader and has been aggressively courting partnerships in AI, quantum computing, and cloud infrastructure. Last month, Trump announced a series of agreements with multiple Gulf countries, including the UAE, related to exporting AI chips and developing AI infrastructure.