Taiwan Semiconductor Manufacturing Company (TSMC) said Tuesday that it will form a joint venture with its corporate allies to build a semiconductor fab in Dresden, Germany, its first factory in Europe.
The project, dubbed European Semiconductor Manufacturing Company (ESMC), will be 70 percent owned by TSMC, Germany’s Robert Bosch, Infineon Technologies, and Netherlands’ NXP Semiconductors, each with a 10 percent equity stake.
Total investments will exceed €10 billion ($11 billion), consisting of equity injection, debt borrowing, and “strong support” from the European Union and the German government, the companies stated.
TSMC’s board of directors has also approved an investment of up to €3.5 billion ($3.8 billion) in the ESMC, according to the company.
“Europe is a highly promising place for semiconductor innovation, particularly in the automotive and industrial fields, and we look forward to bringing those innovations to life on our advanced silicon technology with the talent in Europe,” TSMC CEO Dr. CC Wei said in a statement.
The monthly production capacity of the new fab is expected to reach 40,000 wafers. The companies plan to start building the fab in the second half of 2024, with production starting by the end of 2027.
Kurt Sievers, president and CEO of NXP Semiconductors, said the new foundry will bring “much-needed” innovation and capacity for the range of silicon required to supply the sharply increasing digitalization and electrification of the automotive and industrial sectors.
“We thank the European Union, Germany, and the Free State of Saxony for their recognition of the semiconductor industry’s critical role and for their true commitment to boost Europe’s chip ecosystem,” he said.
German economy minister Robert Habeck hailed the investment as a vote of confidence in a German economy that has been battered by high energy prices following Russia’s invasion of Ukraine.
“There is going to be a real ecosystem for semiconductor manufacturing in Germany,” he said. “It’s going to generate orders for the whole sector—for machine builders, for optics manufacturers, for skilled workers.”
TSMC, the world’s largest chipmaker, is also investing $40 billion in a new plant in the western U.S. state of Arizona, supporting Washington’s plans for more chipmaking at home, and is building a plant in Japan in a joint venture with Sony.
Last month, TSMC chairman Mark Liu told investors during a second-quarter earnings call that the company will delay production at its new Arizona chip plant to 2025 due to a shortage of skilled labor.
Mr. Liu said that the company does not have enough skilled local workers to install advanced equipment at its new facility in time for the official deadline.
Mr. Liu had hoped that the first of TSMC’s two semiconductor production facilities at the Arizona plant would be operational by 2024, with the second coming online by 2026.
TSMC is the primary manufacturer of chips for Apple’s iPhones, and Apple CEO Tim Cook has plans to buy computer chips from the plant. Apple’s next processor for the iPhone is allegedly based on the company’s 3-nanometer process technology.
