As part of its long-term vision, the UAE is focused on modernizing its manufacturing sector to become a global hub for innovation-driven, sustainable industries. By embracing advanced technologies like artificial intelligence, the country aims to build a knowledge-based economy and reduce its dependence on oil.
This shift is crucial as the UAE faces the challenges of finite oil reserves and the need for economic diversification.
Why the UAE requires manufacturing innovation
Today, about 30 percent of the UAE’s GDP is directly based on its oil and gas production, which accounts for nearly 13 percent of the value of its total exports.
Oil, however, is a finite resource, and the Middle East is running out of it fast. Some projections suggest that the UAE and other gulf countries could deplete their reserves by 2034 — just 10 years from now. According to others, the situation isn’t quite this dire, and there’s enough black gold to last the Emirates nearly 300 years if it were to stop exporting.
But the UAE’s economy is currently too dependent on fossil fuel exports. That’s why the country’s government is actively taking steps to diversify its economy away from natural resources. And of course, manufacturing has long been a key component of this economic diversification.
A look at the UAE’s manufacturing market today
Manufacturing already plays a significant role in the UAE’s economy, contributing nearly 10% of the country’s nominal GDP in 2022, making it the third largest sector behind mining and retail trade.
While the share in major cities like Dubai and Abu Dhabi is slightly lower—around 8.7% and 6% respectively — the overall figure is boosted by industrially active Emirates like Ras Al Khaimah and Sharjah. In 2024, the UAE’s manufacturing sector is valued at $132.3 billion, with leading sub-sectors including material goods, consumer products, automotive, and pharmaceuticals.
Recent studies have shown that manufacturing companies in the UAE are prioritizing high quality and speed over cost reduction, a focus that sets them apart from established markets like the US and Europe. To achieve these goals, UAE manufacturers are turning to artificial intelligence (AI) and machine learning (ML).
More than 87% of companies in the UAE have already invested or plan to invest in AI and ML within the next year, outpacing both the US (39%) and Europe (42%), and 44% of respondents cited AI/ML as the primary driver of their biggest business outcomes.
Generative AI, in particular, is leading this technological revolution, with 86% of companies planning to implement it.
How the UAE is pioneering smart manufacturing technologies
But smart manufacturing isn’t just a plan in the UAE. Many companies are already using Industry 4.0 technology to reduce costs and improve production efficiency. Let’s take a look at 3 outstanding examples:
Strata Manufacturing
Strata Manufacturing, an aerospace company in Al Ain, has implemented IoT technologies to improve its production processes. Their system includes sensors across multiple production lines that monitor factors such as temperature, humidity, and equipment performance. This data is processed through a centralized system, which uses machine learning algorithms to predict maintenance needs and optimize production schedules.
These technologies reduce downtime, increase overall equipment effectiveness, and improve the first-time yield rate of composite aircraft structures, helping Strata meet the stringent standards of the aerospace industry.
TECOM Group
Another example of manufacturing innovation comes from TECOM Group, which has implemented an intelligent energy management system across its business districts in Dubai. The system uses IoT-enabled sensors and meters to monitor energy consumption, occupancy, and environmental conditions in real time.
TECOM’s system uses AI to optimize HVAC and adjust cooling based on occupancy and outside temperature, smart lighting controls that take into account natural light levels and space usage, and predictive maintenance for key building systems. All in all, it reduces energy consumption across TECOM’s properties, helping to save costs and reduce environmental impact.
Abu Dhabi National Oil Company (ADNOC)
Finally, ADNOC is at the forefront of Oil and Gas 4.0 technologies. Abu Dhabi National Oil Company (ADNOC) has implemented predictive maintenance through a network of IoT sensors across ADNOC’s assets, which feed data into AI models to predict equipment failures in advance and reduce unplanned downtime.
ADNOC has also created digital replicas of key facilities, including the Panorama Digital Command Center. These twins process large volumes of data points, enabling real-time optimization of operations.At the same time, the company is using blockchain for its supply chain: this system tracks millions of transactions annually, with the goal of reducing the processing time for intercompany transactions from days to minutes.
What support initiatives drive manufacturing growth in the UAE
The UAE wouldn’t have been able to innovate its manufacturing sector so efficiently without the robust support programs offered by its government. We’ve listed the most notable below:
Operation 300bn
Operation 300bn is an ambitious strategy launched by the UAE’s Ministry of Industry and Advanced Technology (MoIAT) to transform the nation’s industrial sector. The plan sets out to boost the sector’s contribution to the GDP from AED 133 billion to AED 300 billion by 2031.
To support this vision, the Emirates Development Bank (EDB) has committed AED 30 billion over five years, focusing on funding SMEs and creating jobs across priority sectors, including petrochemicals, plastics, heavy industries, machinery, electrical appliances, and renewable energy equipment.
And central to Operation 300bn are MoIAT’s initiatives promoting the use of advanced technologies and Fourth Industrial Revolution (I4.0) applications.
Abu Dhabi’s industrial strategy
Launched in 2022, the Abu Dhabi Industrial Strategy (ADIS) seeks to further advance the Emirate’s manufacturing capabilities. With a focus on creating knowledge-based jobs and expanding international trade, ADIS introduces various programs and incentives to stimulate industrial growth.
A key element of ADIS is the Industry 4.0 Programme, which aims to support the integration of advanced technologies into business operations. Complementing this is the Smart Manufacturing Programme, designed to help companies modernize their processes and adapt to new technological trends.
Free zones
Free zones play a vital role in the UAE’s industrial landscape, providing infrastructure and support for companies adopting Industry 4.0 technologies. Jebel Ali Free Zone (JAFZA), aligned with Dubai’s Industrial Strategy 2030, focuses on areas like advanced manufacturing, 3D printing, and smart logistics, offering businesses the tools to implement cutting-edge solutions.
Similarly, Ras Al Khaimah Economic Zone (RAKEZ) serves as a manufacturing hub that supports both traditional industries and companies transitioning to smart manufacturing, enabling the adoption of advanced technologies across sectors.
Venture Funds and Investment Platforms
Venture capital and investment platforms in the UAE are also key drivers of industrial innovation. The Abu Dhabi Investment Authority (ADIA), one of the largest sovereign wealth funds globally, is increasingly investing in advanced manufacturing and industrial technology.
The Dubai Future Foundation is another key player, backing projects that focus on future technologies, including innovations in Industry 4.0 and advancements in manufacturing.
Wrapping up
The UAE is modernizing its manufacturing sector with initiatives like Operation 300bn and the Abu Dhabi Industrial Strategy, along with support for advanced technologies. This positions the country as a leader in smart manufacturing.
With free zones making it easier to enter the market, now could be an ideal time to set up a manufacturing business as the UAE focuses on innovation and sustainability.
