TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co (TSMC) said on Tuesday that its board had approved a 3.5 billion euro ($3.8 billion) investment to build its first European factory in Germany.
TSMC, the world’s largest contract chipmaker, has been in talks with the German state of Saxony since 2021 about building a fabrication factory, or “fab,” in Dresden.
The plant, which will be TSMC’s third outside of its traditional manufacturing bases of Taiwan and China, is central to Berlin’s ambition to boost the domestic semiconductor industry. The automotive industry will have to remain globally competitive.
The company said in a brief statement after a board meeting that it has approved the investment of up to €3.499 billion in a subsidiary, European Semiconductor Manufacturing Company (ESMC) GmbH, of which it will own 70%, to provide foundry services.
Auto parts maker Bosch and semiconductor manufacturer Infineon, both German and Dutch NXP, will each own 10% of the plant, which will have a capacity of 40,000 300 millimeter wafers per month. The opening is planned for 2027.
The European Union has approved the EU Chips Act, a €43 billion grant plan to double chip-making capacity by 2030, in a bid to catch up with Asia and the United States.
TSMC is one of several chipmakers, including Intel and Wolfspeed, looking to use government funding to build factories in Europe.
Brussels and EU member states are pushing for homegrown production by offering billions in state subsidies to reduce dependence on Asian suppliers and ease a global shortage of chips that has wreaked havoc on automakers.
The bloc aims to double its global market share to 20% by 2030.
TSMC is also investing $40 billion in a new factory in the western US state of Arizona to support Washington’s plans to make more chips at home, and also operates a factory as a joint venture with Sony in Japan.
TSMC said in its statement after the board meeting that it also approved a capital injection of no more than $4.5 billion for the Arizona plant as part of the $40 billion total investment.
($1 = 0.9122 euros)
(Reporting by Ben Blanchard and Thomas Escritt, editing by Louise Heavens and Mark Potter)