Taiwan-based chips manufacturer TSMC on Tuesday formally announced an investment of about €3.5 billion into a microchip production plant in Germany, its first in Europe.
The commitment is a huge boost for the EU’s push to become less dependent in the field of microchips, which are used in everything from cars to smartphones. The EU’s goal is to bring its market share in the global semiconductor value chain to 20 percent (from 9 percent now). The goal was set because of pandemic-era shortages, but geopolitical tensions have since become the bloc’s main driver.
TSMC is world-leading in the more advanced types of semiconductors and has been expanding its production capacity outside Taiwan, a major chips hub, in the last few years, with plants in the works in Japan and the U.S. state of Arizona.
In Europe, it will, however, cater to the needs of the German car industry, which prefers less advanced types of semiconductors.
TSMC’s plan was long-rumored, especially since the company’s top management disclosed in a January earnings call that it was evaluating the possibility and that the decision would depend on “customer demand and the level of government support.” The company’s board of directors met on Tuesday and released a statement afterward, confirming a €3.499 billion investment in a German subsidiary, the European Semiconductor Manufacturing Company (ESMC), that is TSMC-majority-owned and that will “provide foundry services.”
By picking Germany, TSMC joins U.S.-based manufacturer Intel, which is in the process of building two semiconductor plants in Magdeburg. TSMC will likely go for Dresden. Germany has emerged as the big winner of the EU’s chips drive, with plans by Infineon and Wolfspeed also in the works.
The country has shown a willingness to lure these chip manufacturers with substantial state aid, helped by the EU’s recently approved Chips Act. Intel signed a revised letter of intent for Magdeburg in July, with increased investment in exchange for more state aid.
It’s unclear how much state aid TSMC is seeking.