People attend the opening of the TSMC global R&D center in Hsinchu, Taiwan July 28, 2023. REUTERS/Ann Wang/File Photo
TAIPEI/BERLIN, Aug 8 (Reuters) – Taiwanese chipmaker TSMC on Tuesday committed 3.5 billion euros ($3.8 billion) to a factory in Germany, its first in Europe, taking advantage of massive government support for the $11 billion factory as the continent aims to bring supply chains closer to home.
The facility, which will be TSMC’s (2330.TW) third outside of traditional manufacturing bases Taiwan and China, is central to Berlin’s ambition to promote the domestic semiconductor industry that its automotive industry will need to remain globally competitive.
The European Union has approved the European Chips Act, a €43bn subsidy plan to double its chip-making capacity by 2030, in a bid to catch up with Asia and the US after shortages and high prices during the Covid-19 pandemic wreaked havoc on the continent’s carmakers and machine builders .
Germany, which has been courting the world’s largest contract chipmaker since 2021, will contribute up to 5 billion euros to the factory in Dresden, capital of the eastern state of Saxony, German officials said.
“Germany is now probably becoming the biggest place for semiconductor production in Europe,” German Chancellor Olaf Scholz said, less than two months after Intel. (INTC.O) notified a €30 billion plan to build two chip manufacturing plants in the country.
“It is important for the resilience of production structures around the world, but it is also important for the future vitality of our European continent, and of course it is especially important for the future vitality of Germany.”
Saxony, the center of the former East Germany’s electronics industry, already has several “manufactures” and inherits a tradition of precision craftsmanship: in one of the 40 rounds of talks, officials from Taiwan Semiconductor Manufacturing Co (TSMC) were invited to see exquisite jewelry in Dresden’s Green Vault museum.
TSMC’s is the single largest investment in Saxony’s history and a boost for conservative state Premier Michael Kretschmer, who faces a strong challenge from the anti-immigration extremist Alternative for Germany party ahead of next year’s regional elections.
VOTE OF CONFIDENCE
“This will only work if Germany becomes a country of immigrants,” Kretschmer told a news conference, acknowledging that filling the 10,000 vacancies to be created by the factory and its suppliers would require more than the investments in education he also planned. .
TSMC said it would invest up to 3.499 billion euros in a subsidiary, European Semiconductor Manufacturing Company (ESMC), of which it will own 70%.
Germany’s Bosch ( ROBG.UL ) and Infineon (IFXGn.DE) and the Netherlands’ NXP (NXPI.O) will each own 10% of the factory, which will make up to 40,000 wafers a month for automotive and industrial and home products when it opens in 2017.
The factory will cost around 10 billion euros in total.
Semiconductor manufacturer Wolfspeed (WOLF.N) has also already taken advantage of the subsidies offered to set up in Germany, as the EU aims to double its global semiconductor market share to 20% by 2030.
German Economy Minister Robert Habeck hailed the investment as a vote of confidence in a German economy that has been hit by high energy prices after Russia’s invasion of Ukraine, sparking a slowdown and fears that Europe’s economic powerhouse may be deindustrializing.
“There will be a real semiconductor manufacturing ecosystem in Germany,” he said. “It will generate orders for the whole sector: for machine builders, for optical manufacturers, for skilled workers.”
TSMC is also investing $40 billion in a new factory in the western US state of Arizona, supporting Washington’s plans for more chip manufacturing domestically, and is building a factory in Japan in a joint venture with Sony.
TSMC said in a statement after a board meeting that approved the German investment that it had also approved a capital injection of up to $4.5 billion for the Arizona facility as part of the $40 billion total investment.
(1 USD = 0.9122 EUR)
Reporting by Ben Blanchard and Thomas Escritt Additional reporting by Christoph Steitz Editing by Louise Heavens and Mark Potter
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