TSMC Announces $3.8 bn Investment in German Semiconductor Plant

Taiwan Semiconductor Manufacturing Company (TSMC) has revealed plans to invest €3.5 billion ($3.8 billion) in establishing its first semiconductor manufacturing facility in Europe, signaling a significant move in the global semiconductor industry. The new factory, set to be located in Dresden, Germany, is part of TSMC’s efforts to expand its production beyond its traditional bases in Taiwan and China.
TSMC semiconductor supplierThe investment has been welcomed by German officials, as it aligns with the country’s ambitions to strengthen its domestic semiconductor industry and support its car manufacturing sector. Germany has been actively seeking to attract TSMC since 2021, recognizing the importance of semiconductor technology in maintaining global competitiveness.

This decision also comes on the heels of the European Union’s approval of the European Chips Act, a substantial €43 billion subsidy plan aimed at doubling the region’s chipmaking capacity by 2030. The move is a response to the chip shortages and soaring prices experienced during the COVID-19 pandemic, which severely impacted European automakers and industrial manufacturers.

Germany, a major player in the European economy, is set to contribute up to €5 billion to the Dresden plant, which is expected to foster a semiconductor manufacturing ecosystem in the region. The plant is projected to produce up to 40,000 wafers per month for various applications, including automotive and industrial sectors.

The investment has been hailed as a boost for the state of Saxony, where Dresden is located, given its history of precision craftsmanship and existing semiconductor fabs. However, challenges could arise in terms of staffing, as Germany is already grappling with labor shortages.

TSMC’s investment in Germany also underscores the company’s global expansion efforts. Alongside the European venture, TSMC is concurrently investing $40 billion in a new manufacturing plant in Arizona, USA, as well as establishing a plant in Japan in collaboration with Sony.

The move represents a significant step toward achieving the European Union’s goal of doubling its global market share in semiconductors to 20 percent by 2030. The investment not only reflects TSMC’s confidence in Germany’s economic potential but also contributes to the ongoing efforts to safeguard the European semiconductor supply chain.