June 1, 2010 8:13 am

Abu Dhabi to create regional semiconductor hub

Abu Dhabi on Tuesday announced plans to bring the global chipmaking industry to the Middle East, as the oil-rich emirate seeks to diversify its economy into knowledge-based industries.

Ibrahim Ajami, chief executive of the state-owned Advanced Technology Investment Company, said his company would invest in building an advanced technology cluster on a 3km-square piece of land just outside the Abu Dhabi international airport.

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Besides building infrastructure, Mr Ajami said Atic would also increasingly explore “the various modes of investment required” to start attracting other semiconductor companies to Abu Dhabi.

“Abu Dhabi is a wealthy nation today because it sits on a lot of resources, oil and gas resources. But oil is finite and will one day run out. Our plan is to bring the semiconductor industry to Abu Dhabi one day,” Mr Ajami told a press conference at Taipei’s Computex trade show.

Atic – which was spun out of Mubadala, Abu Dhabi’s sovereign investment vehicle in 2008 – flexed its financial muscles when it invested $1.4bn in a partnership with Advanced Micro Devices of the US to spin off its manufacturing arm into a new company called Globalfoundries last year.

Atic then paid $1.8bn for a majority stake in Chartered Semiconductor of Singapore, in September last year, which put Globalfoundries just behind Taiwan Semiconductor Manufacturing Co and United Microelectronics as the world’s third-biggest contract chipmaker.

Mr Ajami said Globalfoundries “will be the nucleus, will be the heart” of the new technology cluster, but added that he did not rule out making other acquisitions to bring those companies to Abu Dhabi.

Mr Ajami said Abu Dhabi’s focus would be on building a “capital intensive, manufacturing-driven cluster” rather than one focused on software or chip design, which typically earns higher margins.

“We had to invest and play along the dimensions where we think we have a comparative advantage. Capital intensity is one and energy intensity is another,” he added.

He said, however, that Atic would not go on an acquisition spree “just to build lots of capacity or because of valuations . . . that is not how Atic thinks about its investment strategy”.

“We will not build our semiconductor ecosystem by announcing we’ll open a fab in Abu Dhabi tomorrow”, he said.

Instead, the emirate will invest in Globalfoundries and also in training a pool of domestic talent in Abu Dhabi over the next five years.

The plan includes establishing a new semiconductor polytechnic university in the city, and sending students on internships at Globalfoundries’ facilities in New York, Dresden and Singapore.

Globalfoundries on Tuesday also announced it would spend an additional $3bn to expand capacity at its existing Dresden plant and at its advanced factory in New York, which is still under construction.

The investment would increase Globalfoundries’ capacity in advanced 12-inch technologies by one-fifth.

The move, which reflects confidence in the continued recovery of the technology sector, comes in addition to the $6bn investment Globalfoundries already committed to when it was founded last year.

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