Reuters said TSMC and the German state of Saxony Dresden (Dresden) on the construction of new factory negotiations have entered the late stage, the current negotiations between the two sides focus on government subsidies to support investment
TSMC, the world’s largest contract chipmaker and Asia’s most valuable publicly traded company, had said in 2021 it was in the early stages of evaluating the possibility of building a plant in Germany. Not surprisingly, this will be its first European factory.
Dresden now has a complete semiconductor production chain and supply ecosystem, and TSMC can also get EU subsidies to build a plant here and can be closer to customers in terms of location.
According to public information, Dresden is the largest semiconductor centre in Europe, including Infineon, Bosch, Ge-Core, X-Fab, NXP and other companies have set up fabs, and applied materials, ASML, Siltronic electronic materials (Siltronic) also have complete support in the local, only semiconductor-related employment reached more than 50,000 people.
Taiwan’s Business Times also reported a few days ago that TSMC has chosen to set up a plant in Dresden and expects to start production in 2025 in response to strong local demand for mature special processes in Europe. TSMC expects that in five years, overseas production capacity will account for more than 20% of 28nm and more advanced processes.
A person familiar with the matter told Reuters that talks between TSMC and Saxony are “serious and in-depth” and that a delegation from Dresden, the capital of the eastern German state, has been in talks with TSMC for a long time. The person, who asked not to be named, said TSMC has been discussing the subsidies available for building the plant, given the high costs associated with building a plant in Germany, including labour costs.
In January, TSMC CEO Chieh-Jia Wei said he was in discussions with customers and partners about building an automotive semiconductor-focused plant in Europe based on customer demand and levels of government support. The German and Saxon governments are willing to provide subsidies to TSMC, but they need more EU funding, a second person familiar with the matter said. “No one will come at all without subsidies,” the source added.
For its part, TSMC would not comment, while the Saxon state government said it would be up to the company to decide whether to build the plant in question, but they also added that it had been in talks with industry-leading companies about further investments in the region.
According to the Saxon government, government officials discussed the EU chip bill with European Commission President Ursula von der Leyen in Brussels on March 6. Germany’s economy ministry said it could not comment on the plans of individual companies, but noted that the federal government is willing to support and promote semiconductor production projects under the European chip bill.
Trapped by global geopolitical risks, TSMC has been forced to build new factories outside of China, where it has pledged to invest $40 billion to build a chip factory in the U.S. state of Arizona, as well as one in Japan and is considering building a second factory there.
According to publicly available information, TSMC’s Arizona plant will begin production in 2024 and will use advanced 5nm technology. And today a person familiar with the matter said that if TSMC’s German plant can proceed smoothly, they may only produce those less advanced chips, especially those for the automotive industry, but “these are the chips that the German industry needs,” he added.