Global chip giants Taiwan Semiconductor Manufacturing Co. and Samsung Electronics have been in talks with the United Arab Emirates to explore building megafactories in the Middle East, The Wall Street Journal reported Sunday, citing people familiar with the interactions and strategies involved.

Top executives at TSMC have visited the Gulf state recently to discuss plans of building factory complexes that are comparable to some of the company's largest and most sophisticated facilities in Taiwan, the report said.

South Korea-based Samsung Electronics has also been considering investing in building chip manufacturing facilities in the country in the coming years. Senior leaders in the South Korean company have recently visited the country to explore the idea, the report said.

The Gulf state has been ramping up efforts and investments in developing its domestic tech industry as it works to build its position as a global hub for advanced technology and artificial intelligence. However, the discussions with UAE officials are still in the early stages, the report said. 

A tug-of-war between the U.S. and China has played out in the region as tech deals speed up and Washington grows increasingly wary over Beijing's influence in the Gulf state. TSMC and Samsung have held discussions with U.S. officials who are worried about potential shipments of advanced AI chips coming from UAE-based plants to China.

The U.S. will likely continue to pressure the UAE not to work with China, "as there would be advanced AI-related chips being produced in these plants," Alex Capri, a senior lecturer at National University of Singapore's business school