DUBAI, Oct 12: Gulf Arab Dubai launched on Saturday a project to create its own version of Silicon Valley aiming to become a player in the semiconductor industry.

The Dubai Silicon Oasis (DSO) is part of the desert emirate’s ambitious drive to diversify its economy and establish itself as a regional hub for information technology.

We want to transform our service-oriented economy into a broadbased production-oriented one, said Mohammed al-Zarouni, director general of Dubai Airport Free Zone Authority, which will run the project.

We want to make Dubai one of the world’s foremost centres for the creation of intellectual property and semiconductors, he told a news conference.

Dubai is already the region’s IT, re-export and tourism hub. It has built a number of major development projects in recent years — including a world-class free trade zone, a dry-docks facility as well as the region’s first IT centre.

In a region almost totally dependant on crude oil exports, Dubai, one of the seven sheikhdoms in the United Arab Emirates, relies on oil for only 10 percent of its gross domestic product.

The emirate Dubai plans to launch a regional financial centre that would serve as a bridge between the East and the West.

Zarouni said German semiconductor producer Communicant — owned by Dubai, US chipmaker Intel and the German government would build a $1.7 billion plant in the DSO by 2007.

As part of the deal with Communicant, the firm is building a similar $1.35 billion plant in Brandenburg, eastern Germany.

We are aware that the semi-conductor market is not very good these days, but we expect it will go up again in the next two years, Zarouni said.

Communicant, based in Frankfurt on the Oder on the German border with Poland, says it has developed a world leading technology that will make laptop computers cheaper to build.

The company is relying on both private and public financing. it has already secured $325 million in equity capital from Dubai. A further amount of more than $300 million is being put up by the German federal government and Brandenburg. It has yet to arrange the rest.—Reuters