Taiwanese chipmaker TSMC plans factory in Germany

The Taiwanese chipmaker giant TSMC plans to construct a semiconductor plant in the eastern German city of Dresden. After its board meeting on Tuesday, the company announced that a total investment sum of € 10 billion will be involved.

The plant will be built jointly with Bosch, Infineon, and NXP, each of which will hold 10% of the joint venture. TSMC will hold the other 70%. The Taiwanese company said about 2 000 jobs will be created. Groundbreaking is scheduled for the second half of 2024, and production is expected to start in 2027.

The German government has agreed to help underwrite the construction costs with € 5 billion from the government’s Climate and Transformation Fund (KTF), sources told the German news agency DPA. The European Commission will have to make the final decision on the subsidy funding.

Number one

TSMC is the largest chip manufacturer in the world and now follows other companies in the industry who have also decided to invest in facilities in Germany. It has mastered the production processes for particularly small and efficient chips and is a key company for smartphone providers like Apple.

TSMC’s large plants for this are located in Taiwan, which is considered a geopolitical risk for the entire electronics industry in view of the tensions with Beijing.

Chips for the automotive industry usually require less modern production processes than smartphones, but with the rise of smart and electric cars, the industry needs more and more of them.

The TSMC project is planned under the framework of the European Chips Act, which sets a target of increasing Europe’s share of global semiconductor production to 20%.

“A robust domestic semiconductor production is of particular importance for our global competitiveness because semiconductors keep our world running and make the transformation towards climate neutrality possible: without them, no computer runs, no car drives, neither wind nor solar plants can produce energy,” German Economy Minister Robert Habeck said following TSMC’s announcement.

“This investment in Dresden demonstrates TSMC’s commitment to serving our customers’ strategic capacity and technology needs, and we are excited at this opportunity to deepen our long-standing partnership with Bosch, Infineon, and NXP,” said Dr. CC Wei, Chief Executive Officer of TSMC.

“Europe is a highly promising place for semiconductor innovation, particularly in the automotive and industrial fields, and we look forward to bringing those innovations to life on our advanced silicon technology with the talent in Europe,” he added.

In Germany and all over Europe

In May, the German company Infineon began construction of a € 5-billion chip factory in the eastern German city. Bosch and the US company Globalfoundries also have large plants in Dresden.

German Chancellor Olaf Scholz called TSMC’s plans an important step towards “Germany’s viability in the future.”
“Germany is now probably developing into the largest location for semiconductor production in Europe,” Scholz said on Tuesday. The TSMC project was “important for the resilience of production structures around the world.”

The German government has promised to support the establishment of semiconductor factories with billions of euros. Intel in Magdeburg, for example, is to receive almost € 10 billion from the state for a total investment volume of € 30 billion for a new location.

Infineon is seeking a state subsidy of €1 billion for the expansion of its Dresden plant. Elsewhere in Europe, billions are also being spent to encourage chip companies to locate on the continent, while the US is also resorting to generous subsidies to bring semiconductor production back to the country.

Fierce competition

The news of 2 000 new jobs to fill in Dresden will not be met only with applause in the industry because semiconductor manufacturers are already having problems filling their vacancies. Specialists are desperately needed. There is a global competition for every applicant.

Analysts said the new chip factories in the states of Saxony and Saxony-Anhalt are becoming a challenge for universities all over Germany which will have to provide the necessary young talent. The Institute for Semiconductor and Microsystems Technology at the Technical University of Dresden alone will not be able to master this task.