UAE in talks with TSMC and Samsung to build chip megafactories, WSJ reports.

• Taiwan Semiconductor Manufacturing Co. and Samsung Electronics are reportedly in discussions with the United Arab Emirates to establish megafactories in the Middle East, according to sources.
• The UAE would largely fund the initial terms discussed in the meetings.
• The report states that Mubadala, Abu Dhabi's sovereign wealth fund, will be crucial in funding the expansion of domestic semiconductor manufacturing.

The Wall Street Journal reported Sunday that global chip giants and have been in talks with the United Arab Emirates to explore building megafactories in the Middle East, citing people familiar with the interactions and strategies involved.

TSMC's top executives recently visited a Gulf state to discuss plans for constructing factory complexes similar to the company's largest and most advanced facilities in Taiwan, according to a report.

Samsung Electronics, based in South Korea, is considering investing in chip manufacturing facilities in the country in the near future. Senior leaders from the company have recently visited the country to explore this possibility, according to a report.

The Gulf state has been intensifying its efforts and financial commitment to growing its domestic technology sector in an attempt to establish itself as a leading international center for advanced technology and artificial intelligence. Nonetheless, talks with UAE officials are still in their initial stages, according to the report.

The tug-of-war between the U.S. and China has intensified in the region as tech deals accelerate and Washington becomes increasingly concerned about Beijing's growing influence in the Gulf state. TSMC and Samsung have had talks with U.S. officials who are concerned about the potential shipment of advanced AI chips from UAE-based plants to China.

The UAE is likely to face continued pressure from the U.S. to refrain from collaborating with China on AI-related projects, as advanced chips are being produced in these plants, according to Alex Capri, a senior lecturer at National University of Singapore's business school, as reported by CNBC.

Read the full report from the Wall Street Journal here.