Taiwan Semiconductor Manufacturing Co (TSMC) on Tuesday launched a major new chip plant in Dresden, Germany, expected to be a key supplier to European industry and carmakers after the EU Commission approved 5 billion euros (US$5.5 billion) worth of state aid.
The large aid award for the project, which will cost 10 billion euros in all, is the biggest approved so far under the EU Chips Act, and the first in Germany.
It is also the first project in Europe under TSMC, the world’s largest contract semiconductor maker, and is expected to improve Europe’s resiliency if a chip shortage of the type experienced during the Covid-19 pandemic happens again.
“This is a true win-win situation for all of us,” EU Commission President Ursula von der Leyen said at a ceremony in Dresden, the heart of Germany’s “Silicon Saxony” chip-making region.
German Chancellor Olaf Scholz said ensuring access to semiconductors is a “central issue” for Germany, while Economy Minister Robert Habeck said his government, which has struggled with budget problems, would do all it can to ensure the project enters production on time in 2027 as planned.
TSMC formed a joint venture called the European Semiconductor Manufacturing Co (ESMC) to build the plant, with European firms Robert Bosch, Infineon and NXP each taking a 10 per cent stake.
TSMC chairman and chief executive C C Wei said the plant would help bring the chip maker “close to its customers” in Europe.
Conditions for aid approval included that ESMC guarantee access for smaller companies and universities.
“The facility will operate as an open foundry, meaning that any customer – including but not limited to the three other shareholders besides TSMC – can place orders for the production of specific chips,” the EU Commission said in a statement.
Although the plant will be making generations of chips slightly behind the most advanced technology used in artificial intelligence processors and smartphones, it will add capacity in the range that is most important for automotive and other industrial applications key to European manufacturing.
TSMC says the plant will be an important source of the microcontroller units used throughout cars in windows, brakes and sensors.
Bosch, NXP and Infineon have all said they will also use the plant at least in part to make various types of automotive chips. Following the pandemic shortages, TSMC is also building subsidised projects in the United States and Japan to ensure regional supplies.
Approval for state aid under Europe’s 43-billion-euro Chips Act has been slow in coming, with only STMicroelectronics projects in France and Italy previously winning grants.
The largest European chips project still seeking approval is a 30-billion-euro plant planned by Intel in Magdeburg, Germany that will not break ground this year as initially planned.
Completion of the Intel plant, which would be Europe’s only plant making the most advanced semiconductors, is expected in four to five years after EU approval.
An Intel representative said the company is “working closely with our EU government partners … (to) execute on our plans”.
