UAE semiconductor market is projected to witness a CAGR of 8.70% during the forecast period 2024-2031, growing from USD 3.80 billion in 2023 to USD 7.41 billion in 2031. The market has experienced significant growth over time and is expected to maintain a strong rate over the upcoming years. The urge to be in the front line of technology through 5G, AI, and smart city projects has increased the need to import semiconductors in UAE. Emphasis on innovation and digitalization by the country and seeking assistance from other countries has increased the demand for semiconductor devices across diverse industries that range from industrial automation to automotive.
The introduction of 5G technology has immensely boosted the growth of semiconductors in UAE. 5G technology increases the demand for high-performance semiconductors to power various applications, including smart cities and IoT devices. These changes have led to huge investments in the manufacturing and research of semiconductors, making UAE a regional technology hub. Building a semiconductor ecosystem thus works closely with the more comprehensive vision of economic development and is a goal that the government is trying to achieve tirelessly. As per Ookla Speedtest intelligence data, UAE was regarded as the fastest growing 5G market worldwide in the second quarter of 2023, with a download speed of 557.63 Mbps.
The Automotive Industry is Proliferating the Market Growth Extensively
UAE seeks to be a center for electric and driverless cars. Thus, the country’s automotive sector has become one of the major drivers of semiconductor demand. Intelligent investments in innovative automotive technology, such as in-car networking and driver assistance systems, and the country’s indulgence in collaboration with neighboring countries drive the demand for complex semiconductors.
For instance, in July 2024, the governments of UAE and Saudi Arabia announced that they would work closely with Chinese tech companies to develop semiconductors and AI capabilities, particularly in automotive. The UAE government declared that it wants to become a hub for AI chip manufacturing and gradually move away from depending on oil revenues by diversifying into high-growth industries.
Rise in the Number of Semiconductor Projects is Amplifying the Market Growth
The rise in semiconductor projects in UAE is significantly increasing the demand for semiconductors. UAE will be able to position itself as one of the top-notch competitors in the global semiconductor industry and assist its larger economic diversification goals through the facilitation of technology transfer and knowledge provided by strategic alliances, especially with global leaders.
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For instance, in March 2024, the UAE government declared that by concentrating on sophisticated semiconductor production through strategic cooperation, UAE will become a dominant AI power. The objective of this collaboration is to improve its capacity to produce necessary parts for artificial intelligence technology. UAE aims to satisfy the rising need for sophisticated semiconductors worldwide by establishing long-lasting collaborations and making hefty investments in innovation, thereby establishing itself as a major participant in the tech sector.
Integration of AI with Semiconductor is Propelling the Market Prosperity
To become the center of electric and driverless cars, UAE’s automotive sector has become one of the major drivers of semiconductors. Intelligent investments in cutting-edge automotive technology, such as in-car networking and driver assistance systems, along with the country’s indulgence in collaboration with other neighboring countries, drive the demand for complex semiconductors.
For instance, in June 2024, the UAE government announced that it would solidify its position as a global hub for AI in the future. Moreover, this vision is aided by the creation of MGX, a technology investment company led by the AI and Advanced Technology Council (AIATC). MGX, with its foundational partners G42 and Mubadala, focuses on UAE’s AI infrastructure and core AI technologies. The initiative signifies UAE’s commitment to developing AI for the betterment of the country’s future.
Government Initiatives Acting as a Catalyst
The UAE’s government efforts are essential to making the nation a regional leader in technology, particularly in the semiconductor sector. The government is focusing on the technological advancements of semiconductors in the UAE and is investing a huge sum of money in them.
For instance, in July 2024, the government of the UAE announced that artificial intelligence (AI) will become the main driver of its economic growth. The nation aims to create cutting-edge semiconductors, which are an essential part of the technology’s supply chain. It has established many new semiconductor technologies with potential assets exceeding USD 100 billion.
Abu Dhabi Led the Semiconductor Market in the UAE
Abu Dhabi comprehensively led the market growth in all aspects due to its strategic initiatives to diversify its economy. Mubadala place in Abu Dhabi has significant investments in semiconductors and is a key player in chip production.
Moreover, by developing alliances and improving infrastructure, Abu Dhabi aims to become a global semiconductor supplier and a regional tech leader, in line with its Economic Vision 2030 of boosting innovation and technological advancement.
Future Market Scenario (2024 – 2031F)
1. To further solidify its position in the market, UAE is aggressively looking into merger and acquisition options with Chinese semiconductor firms, including SICC, Sai Micro Electronics, and VeriSilicon. This, in turn, is expected to cater to extensive opportunities for market prosperity in the future.
2. The country aims to build domestic semiconductor manufacturing capacities. It is thereby investing a massive amount towards R&D projects, which, in turn, is expected to cater to ample opportunities for market prosperity in the future.
3. The UAE and other Middle East sovereign wealth funds supported over USD 52 billion worth of semiconductor and artificial intelligence agreements in the first half of 2024, indicating the nation’s capacity to draw large investments in these fields. This, in turn, is anticipated to result in substantial growth opportunities for the market in the forecast period.
Report Scope
“UAE Semiconductor Market Assessment, Opportunities and Forecast, 2017-2031F”, is a comprehensive report by Markets and Data, providing in-depth analysis and qualitative and quantitative assessment of the current state of UAE semiconductor market, industry dynamics, and challenges. The report includes market size, segmental shares, growth trends, opportunities, and forecast between 2024 and 2031. Additionally, the report profiles the leading players in the industry, mentioning their respective market share, business models, competitive intelligence, etc.
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