Taiwan chipmaker giant chooses Germany for its first European factory

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The Taiwanese tech giant, TSMC (Taiwan Semiconductor Manufacturing Company), has been given the green light on Tuesday to establish its first-ever manufacturing facility in Europe. The factory is set to be located in Dresden, Germany, as part of a project with a cost exceeding 10 billion euros. This move is expected to enhance the continent's standing in the strategic electronic sector.

The company's board of directors, which holds over half of the global semiconductor production, has approved the anticipated step. They announced that TSMC will invest around 3.5 billion euros in the factory, with construction expected to commence next year.

TSMC will hold a 70% stake in the project, while three European companies—Dutch firm ASML and German companies Bosch and Infineon—will equally share the remaining stake.

A joint statement by the four companies indicated that the "total investment will exceed 10 billion euros, and will take the form of private equity, loans, and solid support from the European Union and the German government."

This will be TSMC's first factory in Europe. The development coincides with the continent's pursuit to secure a significant position in the production of these vital electronic components, used in a wide range of devices from computers to cars, rockets, and weaponry.

**Government Support**

The company is headquartered in Taiwan. Tensions with Beijing over the island, which China considers a part of its territory, have raised concerns about ensuring the availability of semiconductors and electronic chips to meet global demand.

The disruptions caused by the COVID-19 pandemic to supply chains have also been a cause for concern, revealing the heavy reliance of global industries on Asian suppliers in the electronics sector. The restrictions imposed to combat the virus resulted in significant semiconductor shortages that affected several European sectors, notably the automotive industry.

The planned factory in Germany will specialize in producing semiconductors for the automotive industry, which is undergoing a historic shift towards electric technologies.

TSMC's CEO, C.C. Wei, stated that "Europe is a very promising place for innovation in the semiconductor field, especially in the automotive and industrial sectors," according to a statement issued by the four companies.

The companies aim to start construction on the factory in the second half of 2024, with production expected to commence by the end of 2027.

The factory is expected to create around two thousand direct jobs and have a monthly production capacity of 40,000 300mm silicon wafers, a highly advanced technology in the field of electronic chips.

Berlin is expected to provide governmental support for the project, amounting to around five billion euros through the Federal Climate and Energy Fund, according to local media reports.

The European Union aims to capture 20% of the global chip market by 2030. This year, it allocated 43 billion euros from public and private investments in pursuit of this goal, under what is known as the "Chip Act."

Thierry Breton, the European Commissioner for the Internal Market, welcomed the Taiwanese step, considering it a sign of the progress of this act and reinforcing "Europe's supply security" in this sector.

Germany seeks to become a driving force in enhancing European sovereignty in semiconductor production. The continent's leading economic power is also aiming to rejuvenate its industrial production, which saw a second consecutive monthly decline in June, according to official figures.

Germany's Economy Minister, Robert Habeck, welcomed the Taiwanese investment, indicating that it shows Germany's attractiveness and competitiveness, especially in critical areas like microelectronics.

**"Silicon Saxony"**

Dresden, located in the state of Saxony in eastern Germany, is a key hub for microelectronics production in Europe. It has been dubbed "Silicon Saxony" over the years, likening it to Silicon Valley in the United States where many major tech companies are based.

In June, Germany approved granting the American chip giant Intel around one-third of the cost of a 30-billion-euro factory it plans to build in the city of Magdeburg after months of negotiations.

In addition to Intel, the German company Infineon recently began construction on a semiconductor factory worth five billion euros, while the American firm GlobalFoundries announced a significant investment in the western part of the country.

The majority of TSMC's production is centered in Hsinchu, northern Taiwan. However, the company is expanding its global presence, including building a factory in the US state of Arizona, one of the largest foreign investments in the United States.

This project was postponed until 2025 due to difficulties in hiring qualified labor in the US, a concern also shared by Germany, which faces a shortage of skilled workers.