Taiwanese chip giant TSMC is to build a $3.8 billion production plant in Germany, partly backed by local, EU and Dutch money, as tech leaders continue to divert their supply chains away from China.
Taiwan Semiconductor Manufacturing Co (TSMC) said on Tuesday that its board had approved a 3.5-billion euro investment for the construction of its first European factory.
The world’s largest contract chipmaker, TSMC has been in talks with the German state of Saxony since 2021 about building a fabrication plant, or “fab”, in Dresden.
The plant, which will be TSMC’s third outside of traditional manufacturing bases Taiwan and China, is central to Berlin’s ambition to foster the domestic semiconductor industry its car industry will need to remain globally competitive.
The company, in a brief statement after a board meeting, said it had approved the investment of up to 3.499 billion euros into a subsidiary, European Semiconductor Manufacturing Company (ESMC) GmbH, of which it will own 70%, to provide foundry services.
Auto parts maker Bosch and semiconductor maker Infineon, both German, and the Netherlands’ NXP, will each own 10% of the plant, which will have a capacity of 40,000 300-millimetre wafers per month. It is due to open in 2027.
The European Union has approved the EU Chips Act, a 43 billion euro subsidy plan to double its chipmaking capacity by 2030, in a bid to catch up with Asia and the United States.
TSMC Investing $40bn in US Plant
TSMC is one of several chipmakers, including Intel and Wolfspeed, seeking to draw on government funding to build factories in Europe.
Brussels and EU member states are pushing for home-grown production by offering billions in state subsidies to cut dependency on Asian suppliers and ease a global chip shortage which created havoc for carmakers. The bloc seeks to double its global market share to 20% in 2030.
TSMC is also investing $40 billion in a new plant in the western US state of Arizona, supporting Washington’s plans for more chipmaking at home, and also operates a plant as a joint venture with Sony in Japan.
TSMC said in its statement after the board meeting that it had also approved a capital injection of not more than $4.5 billion for the Arizona plant as part of the overall $40 billion investment.
- Reuters with additional editing by Sean O’Meara