SEMICONDUCTOR INDUSTRY TSMC breaks ground on $11 billion chip plant in Germany

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TSMC, the world’s largest contract chipmaker, has officially begun construction on its new chip plant in Germany with funding from the EU Chips Act.

TSMC has officially begun construction of its first European semiconductor manufacturing plant in Dresden, Germany, a project valued at over €10 billion ($11.1 billion). This significant investment marks a strategic expansion for TSMC, the world's largest contract chipmaker, into the European market. The facility, managed by the European Semiconductor Manufacturing Company (ESMC), is a joint venture where TSMC holds a 70 % stake, with the remaining 30 % equally divided among Bosch, Infineon Technologies, and NXP Semiconductors.

Located in "Silicon Saxony," Dresden was chosen for its strong semiconductor ecosystem and infrastructure. The European Commission has approved €5 billion in subsidies to support this project, the largest aid package of its kind under the EU Chips Act. This financial backing, along with additional support from the German government, underscores the EU’s commitment to strengthening its semiconductor industry and reducing reliance on non-European suppliers. Approval for state aid under Europe's 43 billion euro Chips Act has been slow in coming, with only STMicroelectronics projects in France and Italy previously winning grants.

The new facility will focus on producing mature node processors using TSMC's 28/22nm and 16/12nm process technologies. These chips, though not the most advanced, are crucial for industries such as automotive and industrial manufacturing. Once operational, the plant is expected to produce 40,000 300mm wafers per month by 2029, significantly bolstering Europe’s semiconductor production capacity.

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Construction is set to be completed by the end of 2027, with production beginning shortly thereafter. The plant will create around 2,000 high-tech jobs, contributing to the local economy and reinforcing Dresden’s status as a critical hub in the global semiconductor industry. Last year, Infineon led the global automotive chip market, followed by NXP, with Bosch ranking seventh, according to Semiconductor Intelligence. Both Infineon and NXP rely on TSMC for the manufacturing of microcontrollers and other products.

This investment is part of the European Union’s broader strategy to increase its share of global semiconductor production to 20 % by 2030, enhancing supply chain resilience in the region. TSMC’s move into Europe follows its recent expansions in the United States and Japan, as the company seeks to diversify its production capabilities and reduce dependence on Asian and American semiconductor supplies. The Dresden plant is set to play a crucial role in securing Europe’s technological sovereignty and ensuring the region remains competitive in the global semiconductor market.

The Dresden fab marks TSMC's third overseas venture since 2020, following its $40 billion factory in Arizona, USA, and its $8 billion facility in Kumamoto, Japan. While TSMC moves forward with its plans in Germany, Intel's €17 billion project to build a cutting-edge semiconductor plant has encountered delays.

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