[Taiwan Chip News] TSMC Opens First Production Plant in Germany... Launches Conquest of European Market

Groundbreaking of Wafer Factory in Dresden, Germany
Production to Start in 2027, Manufacturing 480,000 Units Annually
TSMC Chooses Germany as New Supply Chain Hub
Synergy Expected with German Automotive Companies
EU and Germany Also Encouraging... Active Subsidy Support

TSMC, the world's largest foundry (semiconductor contract manufacturer), has begun constructing its first European production plant in Dresden, Germany, raising expectations within Taiwan.

Ursula von der Leyen, President of the European Union (EU) Commission, Wei Zhejia, CEO of TSMC, and Olaf Scholz, Chancellor of Germany, are applauding at the groundbreaking ceremony of the Dresden factory in Germany on the 20th.
[Image source=Reuters Yonhap News]

The industry, including foundry competitors, is also paying close attention. The dominant view is that Europe will become the third semiconductor battleground after Asia and the United States, and TSMC's move is seen as a signal of its full-scale conquest of Europe.

According to industry sources, ESMC, a joint venture led by TSMC, broke ground on its first European production plant in Dresden, Germany, on the 20th (local time). This plant will produce silicon wafers for artificial intelligence (AI) chips as well as automotive and industrial semiconductors, which are core to European manufacturing. Production is scheduled to begin at the end of 2027, with full operation starting in 2029. TSMC expects to manufacture 480,000 silicon wafers annually at this facility.

The groundbreaking ceremony was attended by key figures from German politics, including Ursula von der Leyen, President of the European Commission, and Olaf Scholz, Chancellor of Germany. From TSMC, CEO Wei Zhejia was present. Ursula von der Leyen, who is originally from Germany, stated, "The new plant will produce products that have not been manufactured at any other facility in Europe," adding, "This is a win-win for both TSMC, which aims to diversify its geopolitical (supply chain), and Europe."

As she noted, the Dresden plant was established as a result of the mutual needs of TSMC and Europe aligning. TSMC needed a new base. To secure a supply chain outside of Japan, which has earthquake risks, and the United States, where geopolitical risks have intensified ahead of the November presidential election, TSMC turned its attention to Europe. TSMC particularly focused on Germany, where industries such as automotive are well developed. Chips produced locally in Germany by TSMC, including those for vehicles, are expected to create synergy effects by supplying automotive companies. It is reported that most of the wafers produced at the Dresden plant will be for automotive use. The plant is located near a cluster of European automotive production facilities, and ESMC, led by TSMC, includes participants such as Bosch, which manufactures electric vehicle chargers, and Infineon, which produces automotive semiconductors.

Recently, Europe has been attracting global companies through subsidy policies to expand the semiconductor market within the region. Intel established its base first, and TSMC has recently joined. To coincide with the groundbreaking ceremony of TSMC's Dresden plant, the EU approved a subsidy of 5 billion euros (7.4 trillion KRW) from the German government. EU member states must obtain EU approval to provide state subsidies to domestic industries. The 5 billion euros is reportedly the largest subsidy approved by the European Commission since the 'EU Semiconductor Act' came into effect in September last year. It accounts for nearly half of the total investment of 10 billion euros (approximately 15 trillion KRW). Earlier, Intel announced plans to build a new plant in Magdeburg, Germany, with an investment of 30 billion euros (about 44.4 trillion KRW). The German government also allocated subsidies of 10 billion euros (about 14.8 trillion KRW) for this project. Germany is encouraged by the successive establishment of factories by global companies. Local foreign media have given significant coverage to this news and have highlighted the fact that factories are concentrating in Germany among European countries. When TSMC's Dresden plant construction was decided in August last year, Robert Habeck, Germany's Minister for Economic Affairs, emphasized that TSMC's decision proved that Germany is a powerful, competitive, and attractive country.

Taiwan Economic Daily News = Reporter Lucille Lun / Foreign News / Translation = Asia Economy

※ This article is reprinted based on a strategic partnership between this publication and Taiwan Economic Daily News.