November 21, 2024

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From left: National Information Centre Director Esam AlWagait, Naver Global Investment Officer Lee Hae-jin, Naver CEO Choi Soo-yeon, SDAIA President Abdullah bin Sharaf Alghamdi, President of ESG and External Policy of Naver Chae Seon-ju, Naver LABS CEO Seok Sang-ok, and NAVER Cloud CEO Kim Yu-won post at the Global AI Summit 2024, held in Riyadh, Saudi Arabia, on Sept. 10. (Naver)

In the wake of the artificial intelligence boom, Korean tech giants are seen swiftly expanding their foothold in the Middle East, where countries are turning their eyes to the technology as a hedge to diversify their oil-centric economies.

On Monday, Wall Street Journal reported that the world’s leading chipmakers Samsung Electronics and Taiwan Semiconductor Manufacturing Company were reviewing building new semiconductor manufacturing facilities in the United Arab Emirates in the coming years.

The news outlet said executives from TSMC visited the UAE recently to discuss building a plant complex that could be "on par" with some of the company's most advanced facilities in Taiwan. Senior leaders of Samsung Electronics were also reported to have visited the country recently to discuss possible chipmaking operations in the years ahead.

While the discussions are only in "early phases" and may not materialize, the news outlet added that projects on the scale discussed in the UAE could cost over $100 billion in aggregate.

TSMC is the world's largest chip fabrication firm, producing over 80 percent of the world's most advanced chips that can be used in cutting-edge AI operations. Samsung Electronics is also the world's top memory chip-maker and has the foundry technology to manufacture advanced AI chips.

Samsung refused to comment on the report. But some industry observers here are skeptical of the prospect of Samsung building a new manufacturing fab there, for the regional environment in the Middle East is not the "best" condition for making the most intricate chips.

Among the hurdles is securing "super-clean" water for uses including rinsing the silicon wafers that microscopic circuits are etched onto. Considering much of the UAE's water is produced through desalination, a substantial purification process would be required, experts explain.

Still, the tech giants could develop new ties with the UAE to collaborate on AI development, given the country's strong determination to secure a superpower position through massive investments in the technology.

Other IT giants and AI startups in Korea have also expanded their presence in the Middle Eastern region, forging new ties and building their first regional headquarters there.

Naver announced Monday that it will open its regional headquarters, called Naver Arabia, to oversee all its operations in the Middle East.

"For the plan, we will be joining Saudi Arabia's Regional HQ program and collaborating with the government on a number of large-scale national projects in advanced technology sectors, while exploring various business opportunities," Naver said.

Saudi Arabia has been investing heavily in AI to cut its reliance on oil and gas. Saudi Data and AI Authority projected AI will contribute 12 percent of the country's gross domestic product by 2030, with the sector growing at an annual rate of 29 percent.

Naver said it is also planning to establish joint ventures with Saudi government entities for the smooth operation of their joint projects. One such joint venture under discussion is with Saudi's Ministry of Municipalities and Housing and National Housing Company on digital twin technology projects, Naver said.

Earlier this month, Naver's top executives including Lee Hae-jin, the founder and global investment officer, attended the Global AI Summit 2024 organized by the Saudi Data and AI Authority. They inked a new agreement to collaborate extensively in AI, cloud, data centers and robotics.

Korea's AI startups Rebellions and FuriosaAI also separately inked partnerships with Aramco, Saudi Arabia's energy and chemicals firm.

Aramco said it will be working on supercomputing and AI domains with FuriosaAI. With Rebellions, the collaboration will focus on the potential deployment of the startup's neural processing unit chips in Aramco's data centers, to enhance digital infrastructure, the company said.

Wrtn Technology, another Korean AI startup specializing in generative AI, is also preparing to open its regional headquarters in the Middle East. The company was among the 30 startups in the world chosen by the Dubai Centre for its AI accelerator programs last September.

UAE economic delegation, led by UAE Minister of Economy Abdullah bin Touq Al Marri also visited the startup's headquarters in Seoul last November.

By Jo He-rim (herim@heraldcorp.com)