Korea-UAE Semiconductor and AI Cooperation: A New Strategic Gateway to the Middle East

On November 19, 2025, the announcement of semiconductor and AI cooperation between Korea and the UAE during President Lee Jae-myung’s visit to the UAE has drawn significant interest from the industry. The collaboration, particularly focused on High Bandwidth Memory (HBM) technology and the construction of AI data centers, is expected to become a new growth driver for the Korean semiconductor industry. We will explore whether this cooperation can lead to tangible business opportunities rather than mere diplomatic rhetoric, and what position Korean companies can secure in the Middle Eastern market.

The UAE is currently investing heavily in AI and digital transformation. It has announced Vision 2071, aiming to become a world-leading nation by 2071, and is investing billions of dollars annually in AI technology to achieve this. With AI companies like Abu Dhabi’s G42 experiencing rapid growth, the demand for data center infrastructure is exploding. In this context, it is intriguing how Korea’s HBM technology and EPC (Engineering, Procurement, and Construction) capabilities align precisely with the UAE’s needs.

Korea’s status in the HBM market is absolute. SK Hynix holds over 95% of the global HBM market share, and Samsung Electronics is also expanding its share through mass production of HBM3E. The HBM market size is estimated to be around $15 billion in 2024 and is expected to exceed $25 billion by 2025. With the soaring demand for HBM, a key component of AI data centers, Korean companies are presented with a golden opportunity.

The lineup of companies attending this business roundtable hints at the sincerity of the cooperation. The direct participation of major Korean conglomerate leaders such as Samsung Electronics Chairman Lee Jae-yong, Hyundai Motor Group Chairman Chung Eui-sun, and Hanwha Group Vice Chairman Kim Dong-kwan signals that this cooperation is likely to lead to substantial business deals rather than being a mere political show. Notably, there have been reports that Samsung Electronics is considering semiconductor foundry investments in the Middle East, and this cooperation could serve as a foundation for materializing those plans.

The Rapid Growth of the Middle Eastern AI Market and Opportunities for Korea

The growth of the AI market in the Middle East is truly remarkable. According to a McKinsey report, the Middle Eastern AI market is expected to grow from approximately $2 billion in 2023 to $32 billion by 2030, with an annual growth rate of over 45%. The UAE is projected to account for more than 40% of this growth. This growth is driven by the government’s strong commitment to investing the capital accumulated from oil revenues into future industries.

G42, a leading AI company in the UAE, achieved a corporate valuation of $10 billion in 2024 after receiving a $1.5 billion investment from Microsoft. The company is currently building a large-scale AI data center in Abu Dhabi, with the scale of GPUs and HBM involved amounting to billions of dollars. The issue is that there is currently a shortage of NVIDIA’s H100 and H200 GPUs and the HBM installed in them. With SK Hynix’s HBM backlog already full until the first half of 2025, establishing a direct cooperative relationship with the UAE is significant in terms of securing supply priority.

For Korean companies, the UAE can serve as a gateway not just to the export market but to the entire Middle Eastern and African markets. Geographically, the UAE acts as a hub connecting Europe, Asia, and Africa, with Dubai and Abu Dhabi being the business centers of the Middle East. If Korean companies can create successful references in the UAE, expanding into other Gulf countries such as Saudi Arabia, Qatar, and Kuwait will become much easier.

In fact, Saudi Arabia is investing $500 billion in the Neom City project as part of its Vision 2030, which includes large-scale AI infrastructure. Qatar has also announced a $50 billion investment in digital transformation by 2030. In this context, a success story in the UAE could serve as a stepping stone for Korean companies to enter the entire Middle Eastern market.

Synergy Effects of Clean Energy and Defense Cooperation

A noteworthy aspect of this cooperation is that it encompasses not only AI and semiconductors but also clean energy and defense sectors. The UAE operates Noor Abu Dhabi, one of the world’s largest solar power plants, and has declared its goal to achieve carbon neutrality by 2050. Combining Korea’s battery technology with the UAE’s solar power could generate significant synergy.

LG Energy Solution is already engaged in ESS (Energy Storage System) projects in the Middle East, securing orders of approximately 30GWh by 2024. Samsung SDI is also seeking local partnerships to enter the Middle Eastern ESS market. With the global ESS market expected to grow from $12 billion in 2023 to $46 billion by 2030, the Middle East is projected to account for over 15% of this growth.

Defense cooperation is another intriguing aspect. Korea has already emerged as a major defense exporter, selling K-9 self-propelled howitzers and FA-50 light combat aircraft to countries like Poland and Australia. Korea’s defense exports are expected to reach approximately $17 billion in 2024, ranking fourth globally. The UAE is actively modernizing its defense equipment due to changes in the regional security environment and is particularly interested in technology transfer through local production. Korean Aerospace Industries’ KF-21 fighter jet and various defense equipment from Hanwha Systems are expected to perform well in the UAE market.

Particularly noteworthy is the mention of “joint entry into third countries.” This implies that Korea and the UAE are considering entering markets in Africa or other Middle Eastern countries together. The combination of the UAE’s capital and regional network with Korea’s technology could create significant competitiveness. In fact, the UAE provides development aid to several African countries, and opportunities for Korean companies to participate in these projects could increase.

The mention of Korean beef entering the halal market is also intriguing. The global halal food market is estimated to be around $2.4 trillion in 2023, growing at an annual rate of over 6%. Obtaining halal certification for Korean agricultural products and entering the Middle Eastern market could also aid in the spread of K-food. Korean ramen and kimchi are already popular in the Middle East, and adding Korean beef could further increase K-food’s market share in the region.

However, there are several challenges to overcome before this cooperation can yield tangible results. The key issue is how to address the supply shortage of HBM and AI chips. Currently, SK Hynix’s HBM production capacity cannot keep up with demand, and Samsung Electronics is in the early stages of mass-producing HBM3E. Additional production capacity expansion will be necessary to meet the UAE’s large-scale demand.

Additionally, with U.S. export controls on technology to China affecting Korean companies, it remains to be seen what constraints the cooperation with the UAE might face. Particularly, the export of AI chips and related technologies often requires U.S. approval, which could introduce unforeseen variables.

Nonetheless, this Korea-UAE cooperation is expected to offer significant opportunities for Korean companies. The combination of Korea’s technological superiority in semiconductors, batteries, and defense, the UAE’s capital strength, and the Middle Eastern regional network could create substantial synergy. As specific projects are expected to materialize from the second half of 2025, it will be important to closely monitor the Middle East entry strategies and outcomes of the related companies.

This article was written after reading an Maeil Business Newspaper article and adding personal opinions and analysis.

Disclaimer: This blog is not a news outlet, and the content reflects the author’s personal views. The responsibility for investment decisions lies with the investor, and no responsibility is taken for investment losses based on the content of this article.