February 2025 Updates for Design Engineers 

Read the latest semiconductor and electronics news and updates. 

In this edition:

• Global Industry Leaders Gather in Cairo to Discuss the Future of Semiconductors 

• OpenAI: First Custom Chip Design This Year

• EDGE x Lockheed Martin: Design Localization Revolutionizing  

• Saudi Arabia Chip Hub: First Tapeout in July 

  
  

Global Industry Leaders Gather in Cairo to Discuss the Future of Semiconductors

The Global Semiconductor Alliance (GSA) Middle East & North Africa (MENA) Executive Summit convened on February 20, 2025, at Cairo's Grand Egyptian Museum, drawing over 100 global industry leaders to discuss the region's expanding role in the semiconductor sector. The event featured key figures such as Egypt's Minister of Communications and Information Technology, Dr. Amr Talaat, and GSA Co-Founder and CEO, Jodi Shelton. ​

In his keynote address, Dr. Talaat highlighted Egypt's significant strides in the semiconductor industry, noting a 45% increase in electronic design centers over the past two years and the presence of more than 80 specialized companies exporting high-value tech services. He also emphasized that six global firms now manufacture mobile phones in Egypt, achieving over 40% local value-added content. Additionally, with $3.5 billion invested in digital infrastructure, Egypt leads Africa in broadband speed and ranks among the world's most cost-competitive outsourcing destinations. ​

On his part, Jodi Shelton underscored the MENA region's strategic importance, citing its young and dynamic population as a competitive advantage. She projected that the global semiconductor industry is on track to reach $1 trillion in revenue by 2030, highlighting the critical role semiconductors play in powering modern technologies, from smartphones to advanced computing systems. ​

The summit's agenda encompassed discussions on various topics, including the global semiconductor industry's current state, MENA's potential as a hub for innovative tech development, and advancements in areas such as artificial intelligence, cybersecurity, quantum computing and automotive embedded systems. The event also provided a platform for networking among policymakers, investors and innovators, aiming to position the MENA region as a critical player in shaping the future of technology. ​

The GSA MENA Executive Summit, hosted in collaboration with Egypt's Information Technology Industry Development Agency (ITIDA) and the Egyptian Information & Communication Technology Association (Eitesal), reflects the country's commitment to fostering a thriving semiconductor ecosystem supported by a skilled workforce, competitive costs and robust government backing.

As companies consider expansion into Egypt and the broader MENA region, establishing a reliable semiconductor supply chain becomes paramount for sustainable growth. McKinsey Electronics addresses this need by offering comprehensive component sourcing, distribution and technical localized support tailored to the unique requirements of the regional market. Our expertise ensures that businesses have uninterrupted access to critical semiconductor technologies, enabling them to successfully penetrate these growing markets.

OpenAI: First Custom Chip Design This Year

OpenAI is advancing its efforts to develop proprietary artificial intelligence (AI) hardware by finalizing the design of its first in-house AI chip. The company plans to send the completed design to Taiwan Semiconductor Manufacturing Company (TSMC) for fabrication in the coming months, utilizing TSMC's advanced 3-nanometer process technology. This initiative aims to reduce OpenAI's dependence on external suppliers, particularly Nvidia, for AI chipsets. 

Leading the chip design project is Richard Ho, a former Google engineer with experience in custom AI hardware. Under his leadership, the team has expanded to 40 members, focusing on creating a chip that incorporates high-bandwidth memory and extensive networking capabilities. The initial deployment of this in-house chip will be on a limited scale, primarily for running AI models, with mass production targeted for 2026. ​

This move aligns OpenAI with other tech giants like Amazon, Google, Microsoft and Meta, who have invested in developing custom chips to meet their specific AI and machine learning requirements. By designing its own hardware, OpenAI seeks greater control over its technology stack, potential cost reductions and enhanced performance tailored to its AI workloads. ​

Despite concerns that OpenAI's venture into custom chip development might impact Nvidia's market position, Nvidia's stock has remained resilient. Analysts suggest that while OpenAI's initiative may reduce its reliance on Nvidia, the overall demand for AI hardware continues to grow, sustaining Nvidia's prominence in the industry. ​

To wrap up, OpenAI's development of an in-house AI chip signifies a strategic effort to optimize its hardware for AI applications, reduce dependency on third-party suppliers and align with industry trends toward custom AI hardware solutions.​ While OpenAI is setting the trend in the industry, we, at McKinsey Electronics support similar endeavors by offering access to cutting-edge AI chips, high-bandwidth memory modules and advanced networking components. Our deep industry expertise and reliable supply chain solutions enable businesses to build robust, high-performance AI infrastructures, ensuring they remain competitive in the evolving AI hardware landscape.

EDGE x Lockheed Martin: Design Localization 

EDGE and Lockheed Martin have signed a Letter of Intent (LOI) at the International Defense Exhibition & Conference (IDEX) 2025 to collaborate on localizing the design of advanced chiplet-based processors for single-board computers in the United Arab Emirates (UAE). This partnership aims to enhance the UAE's aerospace and defense capabilities through the establishment of a 'Chiplet Ecosystem Programme'. The initiative is led by HALCON, an EDGE entity specializing in the manufacturing of smart weapon systems and seeks to expand and diversify the UAE's electronics production capabilities.

Chiplet-based processors offer enhanced targeting and guidance by enabling sophisticated onboard computation, which allows for advanced algorithms in target acquisition, tracking and guidance. These high-performance processors can efficiently process data from multiple sensors simultaneously, providing real-time situational awareness. The 'Chiplet Ecosystem Programme' will complement HALCON's existing in-house printed circuit board (PCB) assembly facility, further advancing the UAE's defense technology sector. ​

This collaboration underscores Lockheed Martin's ongoing commitment to fostering innovation and technological advancement in the UAE, marking a significant milestone in their 50-year partnership with the nation.

As the demand for high-performance, localized electronics grows, establishing reliable supply chains and accessing specialized semiconductor components become imperative for regional companies. At McKinsey Electronics, we support any Emirati initiative for technological growth by providing essential semiconductor solutions, including high-speed processors and advanced PCB materials, ensuring seamless integration into next-generation defense systems.

Saudi Arabia Chip Hub: First Tapeout in July

At the recent LEAP conference in Riyadh, Saudi Arabia’s burgeoning semiconductor sector took center stage as the National Semiconductor Hub (NSH) unveiled six months of rapid progress. Emerging as a key player in the Kingdom’s drive to become a global semiconductor powerhouse, NSH is attracting overseas fabless companies while establishing critical manufacturing infrastructure. These efforts include a new design and production plant in partnership with UltraSense and the launch of Riyadh Silicon Manufacturing.

Under CEO Naveed Sherwani, NSH aims to attract 50 semiconductor companies by 2030, fostering an ecosystem that drives innovation, research, and high-value manufacturing in a region historically dominated by oil revenues. A standout achievement at LEAP was the collaboration with UltraSense to establish a state-of-the-art design and manufacturing plant. UltraSense’s expertise in semiconductor fabrication is set to accelerate local capabilities, fast-tracking production with the first chip tape-out scheduled for July 2025—a critical milestone where a chip design is finalized for production.

Riyadh Silicon Manufacturing further underscores NSH’s commitment to building a comprehensive semiconductor value chain. This venture will serve as a cornerstone for local chip production, bolstering Saudi Arabia’s global presence amid rising demand in automotive, telecommunications, and consumer electronics. Backed by $2 million in incentives and $3.2 billion in private venture capital, the initiative is well-resourced to scale rapidly and compete on the global stage, reflecting a strong commitment to diversifying the economy away from oil.

Internationally, the hub’s combination of fiscal incentives, cutting-edge facilities, and a progressive regulatory environment is drawing significant interest from fabless companies. The anticipated July 2025 tape-out will confirm NSH's operational readiness and technical expertise, potentially spurring further global investment. Overall, NSH’s strategic roadmap announced at LEAP marks a decisive step toward transforming Saudi Arabia into a leading semiconductor powerhouse.

​The rapid development of Saudi Arabia’s NSH presents a compelling opportunity for global semiconductor firms aiming to expand into a high-growth market backed by strong government initiatives. With a combination of incentives, infrastructure and a well-defined roadmap, the Kingdom is positioning itself as a critical player in the global supply chain. Strategic partnerships with established and trusted distributors, such as McKinsey Electronics, can offer international companies, trying to penetrate the MENA and GCC markets, essential expertise in supply chain optimization, advanced material sourcing and seamless integration with local manufacturing networks.