The world’s largest chip manufacturer invests 3.5 billion euros in building its first factory in Europe

The world’s largest chip manufacturer Taiwan Semiconductor Manufacturing (TSMC) announced that its management has approved an investment of 3.5 billion euros for the construction of TSMC’s first European factory in Dresden, Germany.

TSMC has been negotiating with the German state of Saxony since 2021 about building a manufacturing facility in Dresden.

The factory, which will be TSMC’s third outside its traditional manufacturing bases in Taiwan and China, is crucial for Berlin’s ambitions to boost its domestic semiconductor industry, which will be necessary for its automotive sector to remain globally competitive.

After a board meeting, TSMC announced that it has approved an investment of up to 3.5 billion euros in the European Semiconductor Manufacturing Company (ESMC), in which it will own 70 percent and will provide foundry services.

German auto parts manufacturer Bosch and semiconductor manufacturer Infineon, along with Dutch NXP, will each own 10 percent of the factory, which will have a monthly capacity of 40,000 300-millimeter wafers. The facility is expected to open in 2027.

The European Union has approved the EU Chips Act, a subsidy plan of 43 billion euros to double chip production capacity by 2030, in an attempt to catch up with Asia and the U.S.

Germany will invest up to five billion euros in the factory in Dresden, German officials said.

– There will be a real ecosystem for semiconductor manufacturing in Germany. Orders will be generated for the entire sector – machine manufacturers, optics, and skilled workers – said German Minister of Economy Robert Habeck.

A regional official stated that the state of Saxony will invest in training and infrastructure to support the largest single investment in the state’s history, although Germany is facing a significant labor shortage, and hiring staff could prove challenging.

– With this TSMC investment, another global player in the semiconductor manufacturing sector is coming to Germany. This shows that Germany is an attractive and competitive location, Habeck added.

TSMC is also investing 40 billion dollars in a new factory in the western U.S. state of Arizona, supporting U.S. plans for greater domestic semiconductor production, and is also managing a Japanese factory in partnership with Sony as part of a joint investment.

The Taiwanese company announced that it has also approved a capital investment of no more than 4.5 billion dollars for the factory in Arizona as part of the total investment of 40 billion dollars.