Aiming to revolutionise the continent’s semiconductor and automotive industry, TSMC opens its first European fab in Germany with a $5.5 billion grant from the government as the European Union approves the sanction.
On Tuesday, Taiwan Semiconductor Manufacturing Company (TSMC) officially opened its long-awaited European chip fab in Dresden, Germany, with plans to create 2,000 job opportunities for semiconductor experts across Europe.
The €10 billion ($11 billion) initiative, which has received €5 billion ($5.5 billion) in state funding under the EU Chips Act, marks the most extensive aid package approved under this program and the first of its kind in Germany, according to Reuters.
This plant marks TSMC’s first semiconductor project in Europe and is crucial for bolstering the continent’s defence against future chip shortages. It is expected to ensure a steady supply of essential semiconductors across the continent.
To manage the plant, TSMC has established a joint venture called the European Semiconductor Manufacturing Company (ESMC), with European firms Robert Bosch, Infineon, and NXP, each owning a 10 per cent share.
ESMC plans to produce 40,000 300mm wafers monthly using advanced TSMC technologies, supporting Europe’s semiconductor industry with FinFET transistors. The facility will also be accessible to smaller companies and academic institutions, and chips will be manufactured slightly less advanced than those used in AI and smartphones.
Furthermore, the plant will be crucial for producing microcontroller units (MCUs) widely utilised in automotive systems such as windows, brakes, and sensors. Bosch, NXP, and Infineon have all pledged to use the plant for producing various automotive chips.
In a statement announcing the subsidy approval, the Commission explained that the facility would function as an open foundry, allowing any customer, not just the three shareholders alongside TSMC, to place orders for the production of specific chips.
TSMC CEO C.C. Wei also highlighted that the new plant would help the company stay closer to European customers.
During the inauguration ceremony for the plant, EU Commission President Ursula von der Leyen remarked that the situation was a genuine win-win for everyone involved. German Economy Minister Robert Habeck expressed approval of the decision, noting that his government would continue to support the project’s swift progress, aiming for production to commence in 2027, and would finalise the necessary funding.
In addition to this European expansion, TSMC is increasing its manufacturing capabilities through subsidised projects in the United States and Japan to ensure regional supply security.
Despite the EU’s €43 billion Chips Act, which has seen slow state aid approvals, previous grants have been awarded only to STMicroelectronics for projects in France and Italy.
Currently, the largest European semiconductor project, a €30 billion plant planned by Intel in Magdeburg, Germany, is still awaiting approval. This facility, claiming to be the only plant in Europe producing advanced computer chips, is projected to be completed four to five years after receiving EU approval. Intel has stated it is collaborating closely with EU government partners to advance its plans.
