Giant incentive from Germany Huge investment from TSMC: Europe becomes a semiconductor center

Taiwanese chip manufacturer TSMC is preparing to establish a 10 billion Euro chip factory in Germany as part of its global diversification strategy. The company plans to build this factory in Dresden together with Bosch, Infineon and NXP. The German government, on the other hand, offered a subsidy of 5 billion Euros to TSMC to support this project. The joint venture, which will be formed by the coming together of four companies, aims to start construction in the second half of next year and production is planned to start by the end of 2027.

Huge investment from TSMC in Germany

The Taiwan-based group met with automotive supplier Bosch and chipmakers Infineon and NXP to build the factory in the eastern city of Dresden, the four companies announced on Tuesday. TSMC’s board of directors has approved an equity investment of up to 3.5 billion euros in European Semiconductor Manufacturing Company GmbH (a wholly owned subsidiary of TSMC).

This decision highlights TSMC’s strategy of switching to regional manufacturing hubs to reduce its reliance on Taiwan for semiconductor supply. The company is taking steps to increase factory investment abroad as governments and chip customers around the world worry about the negative impact on the supply chain if China attacks Taiwan.

It is known that Germany is one of the leading centers in chip production with generous state supports and continues to grow in this field. Meanwhile, the EU as a whole aims to double its share of the global semiconductor market from 10 percent to 20 percent by the end of the decade. Intel also announced in June that it would establish two production facilities in Germany and the total investment was 33 billion Euros. We can say that Germany has now probably become the main base for semiconductor production in Europe.

This new factory will also be important for the automotive industry. “Europe is an extremely promising place for semiconductor innovation, particularly in the automotive and industrial fields,” CC Wei, CEO of TSMC, said in a statement. says. Automotive applications, which make up a significant portion of TSMC’s revenue, have increased significantly in recent years. In the second quarter, automotive applications accounted for 8 percent of TSMC’s revenue, up from 2 percent three years ago.

TSMC decided to take the investment decision in Germany due to the lack of skilled labor and semiconductor facilities already in Germany, despite the shortcomings in materials, tools and services. Among the company’s major areas of concern are the supply chain ecosystem and workforce supply. However, the German government states that they will take quick steps on these issues.