Taiwanese chip giant TSMC chooses Germany for first plant in Europe

Taiwanese semiconductor giant TSMC announced on Tuesday an investment of US$ 3.8 billion to build a plant in Germany, a project that will strengthen the European continent in this strategic industrial sector.

Total investments in the factory, the first of TSMC in Europe, exceed US$ 10,000 million, with the “strong support from the European Union and the German government”, reads a statement.

TSMC will control 70% of the project and will work with three European partners, the Dutch NXP and the germans Infineon and Boscheach with a 10% stake.

The construction of the plant will begin in the second half of 2024.

Taiwan Semiconductor Manufacturing Company (TSMC) is a key player in the sector since it controls more than half of the world production of microchips.

The German plant is expected to start producing at the end of 2027 and generate some 2,000 direct jobs, the companies detailed.

This investment “shows that Germany is an attractive and competitive country, particularly when it comes to key technologies such as microelectronics”, declared the German economy minister robert habeck.

Hit by the energy crisis unleashed by the Russian invasion of Ukraine, Germany and its Western allies seek at all costs to reduce their dependence on countries like China and increase domestic production of strategic components, such as semiconductors.

The ambition of the European Union with its call “chip law” is to increase the European share in the world production of semiconductors, up to 20% in 2030.

In a world increasingly reliant on technology, these chips are needed to power everything from coffee machines to missiles.

Silicon Saxony

The tension between China and the island of Taiwan, which Beijing considers part of its territory, has heightened concerns about the global supply of chips.

This concern began with the Covid-19 pandemic, which revealed the dependence of the European industry on Asian suppliers.

The new factory will be built in the eastern city of Dresden, in a region known as Silicon Saxony for being a center of high-tech industries.

It will specialize in the production of semiconductors for the automotive sector, which is undergoing a historic mutation towards electrical technology.

“Europe is a very promising place for semiconductor innovation, particularly in the automotive and industrial fields, and we look forward to bringing those innovations to life in our advanced silicon technology with the talent of Europe.”CC Wei, CEO of TSMC, said in a statement.

The bulk of TSMC’s production is in Hsinchu, in northern Taiwan, but the group is expanding its global business with a planned plant in Arizona, one of the largest foreign investments in the United States.

This has been delayed until 2025 due to difficulties in recruiting skilled workers in the United States, a concern that also affects Germany, where labor shortages are especially acute.

Source: AFP