TSMC Plans Additional Factory Construction in Europe

Active Response to European AI Chip Demand
"Additional Investment Pressure Expected Regardless of US Presidential Election Outcome"

Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturer), plans to expand its European factories, a senior official from the Taiwanese government revealed. This move aims to actively respond to the demand for artificial intelligence (AI) semiconductors in Europe while diversifying production bases to the United States, Japan, Germany, and other locations.

On the 14th, Wu Cheng-yuan, Chairman of Taiwan's National Science and Technology Council, stated in an interview with Bloomberg TV, "TSMC has started building its first (European) factory in Dresden, Germany, and plans to construct several factories for various markets in the future."

[Image source=AFP Yonhap News]

This statement is interpreted as implying the possibility of TSMC building additional factories in Europe. However, Chairman Wu did not disclose specific plans regarding the construction of European factories.

TSMC is building new production bases in the United States, Japan, Germany, and other countries in preparation for escalating geopolitical tensions with China. In August, TSMC broke ground on a chip manufacturing plant in Dresden, Germany, its first European factory, with an investment of 10 billion euros (approximately 14.8225 trillion KRW). The European Union (EU) and the German government are supporting half of the total investment amount, contributing 5 billion euros. The factory is scheduled to produce AI chips as well as automotive and industrial semiconductor wafers, with production set to begin by the end of 2027.

Chairman Wu said that the AI chip market, including companies like Nvidia and AMD in the United States, will be the most important sector for TSMC, and other semiconductor companies may also provide opportunities for TSMC. He stated, "Since these companies will also operate in the European market, TSMC is considering this in its plans for the next factory." He added that whether TSMC will expand the Dresden factory or build a new production base in another part of the EU will require further evaluation.

Furthermore, Chairman Wu revealed that the Taiwanese government is considering supporting TSMC suppliers to invest in the Czech Republic, which is close to Dresden. Efforts are also underway to promote joint research and development programs for Taiwanese and Czech scholars.

Although the Czech Republic maintains official diplomatic relations with China, it also has close unofficial ties with Taiwan. Last year, senior Taiwanese officials, including Chairman Wu, visited the Czech Republic.

However, TSMC told Bloomberg that it is focusing on its global expansion projects and currently has no new investment plans.

Meanwhile, Chairman Wu expects that regardless of the outcome of the U.S. presidential election in November, Taiwanese semiconductor companies will face additional pressure to expand investments in the United States. TSMC has pledged to invest more than $65 billion to build three factories in Arizona.

Chairman Wu said, "In the short term, it may be painful for Taiwanese companies due to the high initial costs, but in the long term, it will probably benefit Taiwanese companies."