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Can Abu Dhabi Become a High-Tech Oasis?

Abu Dhabi, the capital city of the United Arab Emirates, is known for its oil riches (some say it’s the richest city in the world) and its glitz (where else might you find the Ferrari World theme park, set to open this fall?). But semiconductors?

Advanced Technology Investment Co. (ATIC), which now owns two-thirds of {complink 12822|GlobalFoundries Inc.} ({complink 103|Advanced Micro Devices} holds the other 33 percent), aims to fuel the development of the semiconductor industry in Abu Dhabi. ATIC is an arm of the Mubadala Development Co., the sovereign wealth fund of the government of Abu Dhabi, which has a goal of diversifying the area’s economy. In September, ATIC CEO Ibrahim Ajami said the company plans to invest between $6 billion and $7 billion to build a fab there. The facility will produce 12-inch wafers, will ramp up production by 2015, and will be operated by GlobalFoundries, according to Ajami.

ATIC’s goal is to develop a complete advanced manufacturing ecosystem. But it’s got a long way to go. The area has almost none of the infrastructure needed to become a high-tech hub. There are no suppliers, distributors, or design houses. The local universities don’t offer semiconductor training.

But ATIC has the money and patience to develop all of those things. Just last weekend, for example, it sponsored a Semiconductor Vision Summit in Abu Dhabi. According to a press release, ATIC expected attendance by more than 250 “top technology executives.” The keynote speech was to be given by Biz Stone, co-founder of {complink 11949|Twitter Inc.} What he has to do with the semiconductor industry is a mystery to me.

Within the last six months, ATIC also has:

  • Co-hosted a forum in Abu Dhabi with the Semiconductor Research Corp. (SRC), focused on low-power electronics
  • Sponsored an internship program for 60 Emirati students at the GlobalFoundries fab in Dresden, Germany
  • Worked with MIT to help develop a Masters program in microelectronics at the Masdar Institute of Science and Technology in Abu Dhabi
  • Established a professorship chair for semiconductor research at United Arab Emirates University
  • Joined a syndicate of venture capitalists and companies that invested $48 million in Smooth-Stone Inc., an Austin, Texas-based startup developing low-power chips for the server market

Observers expect to see more investments in other companies that could play a part in building a semiconductor ecosystem in the area. “[ATIC] needs to act as a catalyst to get the ecosystem started,” says John Ciacchella, a principal in Deloitte Consulting and leader of its semiconductor practice in Silicon Valley. “Eventually they will have to encourage even the primary suppliers to the industry — like equipment manufacturers and some of the specialty chemicals and gas companies” to locate there.

Where would you expect ATIC to invest next? Is a glittering Abu Dhabi-based office in your future?

Tam Harbert has been covering electronics since the dawn of surface-mount technology. She lives online at www.tamharbert.com

10 comments on “Can Abu Dhabi Become a High-Tech Oasis?

  1. Barbara Jorgensen
    November 18, 2010

    I've seen Abu Dhabi in the news a lot too. A high-tech security symposium was held there recently, I believe.

    Judging by the input on EBN's pages, there's some additional information the country will have to provide: labor rates and the availability of a workforce. Although a lot of high-tech manufacturing is automated, companies still weigh labor costs heavily into their decision-making. Did you see any data on this during your research?

     

  2. AnalyzeThis
    November 18, 2010

    No, a glittering Abu Dhabi office is not in my future, and I'm sure you can find plenty of companies who regret setting up an outpost in Dubai.

    As the catastrophic economic collapse in Dubai should have demonstrated, the UAE is deeply flawed. Yes, a lot of money is being and has been spent there the last decade or so, but no amount of money invested into the UAE can change the fact that it's essentially a barren wasteland, a terrible source of labor, and riddled with a wide variety of infrastructure and cultural-based issues.

    I have read about the rise and fall of Dubai quite extensively, so I am immediately extremely skeptical of anything going on in that region.

    Anyhow, ATIC may throw some money around and erect some smoke and mirrors, but I'd be willing to wager any amount that there's no way Abu Dhabi will ever become even a minor player in the semiconductor space.

     

  3. SP
    November 18, 2010

    Well when you have lot of money you think everything can be bought. But making ABU Dhabi high tech oasis, I would say its a a good dream. Do they have enough engineering college or local people with engineering qualifications? They are know for oil wells. And thats why they have so much money. Or many be they have plan to bring everyone from outside and pay huge money and get it done.

  4. AnalyzeThis
    November 18, 2010

    If you do any research on how Dubai was built, you'll quickly discover that the vast, vast majority of labor was imported from poorer surrounding countries. And most of the people working in those Dubai offices were outsiders as well.

    This is just one of the many flaws that I mentioned in my post below. Anyhow, if you're interested on reading more on Dubai, I'd recommend this article.

  5. Tam Harbert
    November 18, 2010

    The labor issue is a major one. First, Human Rights Watch has accused Abu Dhabi of importing and then abusing thousands of workers from South Asia. See “The Island of Happiness” at http://www.hrw.org/node/83111. That could become an issue in the actual construction of the fab. As for the workers they would need to actually operate the fab – there simply are no high-tech workers in the area. Abu Dhabi is trying to stimulate some activity in the universities, but they have a long way to go. Many people cite that as the #1 barrier to developing the area as a high-tech hub.

  6. saranyatil
    November 19, 2010

    This is an interesting topic to discuss, there are lots of doubts arising with regard to this issue first is how are they going to manage the workforce to start fab it requires highly skilled workers , few south asian countries impose lot of restrictions on their labour though  they have enough potentials to support financially we have to look into issues like the quality and performance of their fab industries.

  7. Mydesign
    November 19, 2010

        I don’t think man power is a problem for Dubai or any other country, even though local head count is less. If the government or any other firms are taking the initiative, its very dam sure that engineering work forces can be pooled in. This scenario happens in each and ever corner of the world. If there is a requirement and the pay package is best, majority of engineers are ready for migration.

  8. tioluwa
    November 19, 2010

    Can Abu Dhabi Become a High-Tech Oasis? Yes, why not? We're still on plant earth, and anything is possible. We all knwo the first rule in acheiving anythign is to desire it.

    Then when we're ready to leave the meager level of empty dreams, then we find out the odds, what we lack, what we have, and how to get what we don't have.

    Abu Dhabi lacks the skilled man power, so theya re pimping their educational system. If they have labor problems like has been pointed out then i expect that they will have to work out a solution to that if they are serious.

    If DennisQ know why Dubai failed, then i guess Abu Dhabi does also, and i expect them to learn from it and find a way around it.

     

    for me, Time will tell, but i think its possible

  9. Ms. Daisy
    November 19, 2010

    I echo the resounding yes that Abu Dhabi can become a high-tech oasis. What they UAE may lack in skilled human resources can be made up with the available financial investment they can bring to bear if they are smart in pooling the collective resources of their neighbors. Obviously there is a lot they need to learn from Dubai's failure. 

  10. kumar1863
    November 21, 2010

    Yes the chances for Abu Dhabi to become a high-tech oasis are very high. If we look at the number of Abu Dhabi students pursuing master's in technology areas in USA and all around the world are increasing day by day. Abu Dhabi government is encouraging by sponsoring all diploma students to get higher degrees in the relevant technical areas from good universities around the globe. They realized that they will reach a critical point where there won't be any fuel resources to help their economy. To maintain the lead position in the market they are investing in all the possible ways like it has 70% stake in Global Foundries which is one of largest foundries around the world.  

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