By Yara Abi Farraj
Share

Taiwan’s TSMC breaks ground on $11 billion chip factory in Germany

TSMC expects to hold a 70 percent stake in the Germany plant, with the other partners will each hold 10 percent
Taiwan’s TSMC breaks ground on $11 billion chip factory in Germany
Following TSMC's announcement, the EU Commission approved 5 billion euros ($5.5 billion) worth of state aid to support Germany's new chip factory (Image: DPA)

The Taiwan Semiconductor Manufacturing Company Limited (TSMC) broke ground today on its first European chip factory in Germany’s eastern city Dresden. The investment of just over €10 billion ($11.1 billion) is a joint project between TSMC and Bosch, Infineon, and NXP Semiconductor, which already have a presence in Dresden.

TSMC expects to hold a 70 percent stake in the Germany plant, with the other partners will each hold 10 percent.

The plant will be known as the European Semiconductor Manufacturing Company (ESMC). TSMC also announced that production will likely begin in 2027, focusing on chips for the automotive industry. TSMC’s first factory in Europe will create 2,000 jobs.

EU’s shift to localize chip production

The investment aims to spur the European Union’s strategic shift in semiconductor production. In addition, it seeks to double Europe’s current share of the global chip market from its present 10 percent to safeguard its chip supply amid growing U.S.-China tensions.

German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen attended the foundation stone laying ceremony.

Germany is leading the EU’s goal of producing 20 percent of the world’s semiconductors by 2030, with the bloc seeking to build capacity following pandemic disruptions. This move is of strategic importance as the relationship between the U.S. and Beijing deteriorates.

The world’s top economies are bolstering investments and efforts to localize their chip industries which serve as a vital component for technological development amid the artificial intelligence boom.

Read| Senegal’s first satellite is in orbit: A collaborative effort to harness space technology for socio-economic progress

EU Commission approves $5.5 billion 

Following TSMC’s announcement, the EU Commission approved 5 billion euros ($5.5 billion) worth of state aid to support Germany’s new chip factory. The large aid award for the project is the largest aid approval so far under the EU Chips Act, and the first in Germany. Conditions for aid approval included that ESMC guarantee access for smaller companies and universities.

Approval for state aid under Europe’s 43 billion euro Chips Act has been slow, with only the STMicroelectronics projects in France and Italy previously winning grants. The largest European chips project still awaiting approval is a 30 billion euro Intel plant in Magdeburg, Germany that won’t break ground this year as initially planned.

For more news on technology, click here.

The stories on our website are intended for informational purposes only. Those with finance, investment, tax or legal content are not to be taken as financial advice or recommendation. Refer to our full disclaimer policy here.