<h3 dir="ltr" style="text-align: justify;">Introduction</h3>
Geopolitical tensions in the Middle East are no longer affecting only global oil and gas markets. They have increasingly spread to advanced technology sectors, particularly artificial intelligence and semiconductors.&nbsp;&nbsp;
The Strait of Hormuz is one of the world's most critical maritime chokepoints, carrying around one-quarter of global seaborne oil trade, in addition to a substantial share of global liquefied natural gas exports. Disruptions to navigation through the Strait have triggered significant turbulence in energy markets, driving higher prices and tighter supplies, thereby threatening the stability of energy-intensive industries, most notably semiconductor manufacturing and AI data centers.
These developments are also reshaping global supply chains and prompting companies and governments to seek production locations that are more resilient and less exposed to geopolitical risks. Egypt is well positioned to benefit from this transformation due to its strategic geographic location, diversified energy mix, and increasingly advanced digital and logistics infrastructure.
<h3 dir="ltr" style="text-align: justify;">AI and chips depend on energy</h3>
Artificial intelligence is experiencing unprecedented global expansion. According to the United Nations Conference on Trade and Development, the global AI market is expected to grow from US$189 billion in 2023 to approximately US$4.8 trillion by 2033 (UNCTAD, 2025), positioning AI as the principal driver of advanced technologies over the decade.&nbsp;
Meanwhile, the global semiconductor market, which encompasses the design, manufacturing, and sale of chips that underpin modern digital technologies - including artificial intelligence, cloud computing, data centers, and advanced electronics - reached approximately US$800 billion in 2025. Driven by rapidly growing demand for advanced chips supporting AI applications, cloud services, and digital infrastructure, the market should reach approximately US$1 trillion in 2026 (WSTS, 2026).
Despite their highly sophisticated technological nature, these industries fundamentally depend on stable electricity supplies. Data centers form the backbone of AI infrastructure, and their electricity consumption should increase by around 15% annually through 2030 reaching approximately 945 terawatt-hours (TWh), or roughly 3% of global electricity demand. This is more than four times the growth rate of electricity demand in other sectors, reaching (IEA, 2025).&nbsp;
The semiconductor industry is also projected to consume around 237 TWh of electricity globally by 2030 (Greenpeace East Asia, 2023), roughly equivalent to Australia's annual electricity consumption.&nbsp;
As a result, energy security has become one of the key determinants of competitiveness in the global AI race, prompting many countries to expand nuclear and renewable energy generation while securing reliable electricity supplies for data centers and semiconductor fabrication plants
<h3 dir="ltr" style="text-align: justify;">Asia under pressure</h3>
Asian economies bear the greatest exposure. In 2025, nearly 80% of oil exports and 90% of LNG shipments passing through the Strait were destined for Asian markets, compared with only around 10% for Europe (IEA, 2026). Furthermore, East Asia's semiconductor manufacturing hubs rely on uninterrupted energy and natural gas supplies (Pan, 2026). As of 2026, Samsung Electronics and SK Hynix jointly account for approximately 80% of global HBM production and around 70% of the DRAM market (Sourceability, 2026), meaning that any disruption to energy security directly affects the supply of AI chips worldwide.
<h3 dir="ltr" style="text-align: justify;">Beyond oil: Critical materials&nbsp;</h3>
In 2025, Qatar supplied approximately one-third of the global helium market, making it a key supplier of this critical resource used in semiconductor manufacturing, especially for cryogenic cooling processes and advanced electronics applications (ASP Isotopes Inc., 2026). Any disruption to LNG production tightens global helium supplies and significantly raises manufacturing costs.
These supply chain vulnerabilities coincided with a sharp increase in energy prices. Brent crude oil rose from US$72.5 per barrel at the end of February 2026 to more than US$118 per barrel during March (Investing), while European natural gas prices nearly doubled (Investing). According to Morningstar, energy costs represented approximately 3&ndash;6% of semiconductor companies&rsquo; revenues in 2025, making the industry sensitive to energy price volatility (Morningstar, 2025).
<h3 dir="ltr" style="text-align: justify;">Reshaping the chip industry</h3>
Governments worldwide had already adopted semiconductor reshoring strategies, which gained momentum after supply chain disruptions exposed structural vulnerabilities.
The United States allocated US$52.7 billion under the CHIPS and Science Act, while announcing more than 100 new projects backed by private investments exceeding US$500 billion in 2024 (NIST, 2024). Similarly, the European Union launched the European Chips Act in 2022, mobilizing approximately &euro;43 billion to increase Europe's share of global semiconductor production to 20% by 2030 (EU, 2022). China expanded investments through the third phase of its National Integrated Circuit Industry Investment Fund in 2024, committing 340 billion yuan to strengthen domestic semiconductor capabilities (Lee, 2024).
<h3 dir="ltr" style="text-align: justify;">Egypt: A strategic gateway</h3>
Against this backdrop, Egypt is emerging as a promising destination for the redistribution of global investments in artificial intelligence and semiconductor industries.&nbsp;
Egypt benefits from an increasingly diversified energy mix, including natural gas, renewable energy, and planned nuclear generation. Although energy security remains constrained by rising domestic demand and continued reliance on imported liquefied natural gas, ongoing investments in electricity generation and transmission are strengthening the resilience of the power system.
Its strategic location at the crossroads of Africa, Europe, and Asia, combined with the Suez Canal and an extensive network of international submarine cables, provides significant logistical and digital advantages for hosting data centers and semiconductor value chain activities.
Egypt's competitiveness is further reinforced by abundant reserves of high-purity silica sand and quartz (Yassin et al., 2024), both essential raw materials for semiconductor production. In 2026, Egypt expanded export incentives for semiconductor and electronics design and embedded systems services under a seven-year framework, aiming to enhance the sector's global competitiveness and attract investment (ITIDA, 2026).
The government&rsquo;s inauguration of the Government Data and Cloud Computing Center (P1) in April 2024 strengthened Egypt's digital infrastructure for cloud computing, big-data analytics, and artificial intelligence, enhancing its capacity to support data-intensive industries and attract technology investment (SIS, 2024).
To achieve this objective, Egypt needs a coordinated policy framework combining stable, performance-based investment incentives, dedicated semiconductor clusters with reliable infrastructure, and specialized workforce training in partnership with international firms. Technology-transfer agreements and international university&ndash;industry R&amp;D partnerships would further support technology upgrading and local innovation. These measures would enable Egypt to progressively build capabilities from design, assembly, testing, and packaging toward higher-value activities within global semiconductor value chains.
<hr>
References
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