EU Approves Record State Aid for TSMC’s New German Chip Plant

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has initiated a significant new project in Dresden, Germany with EU funding. According to Reuters, the plant, which is expected to become a crucial supplier to European industries and automakers, was officially launched after the European Union Commission approved state aid amounting to €5 billion ($5.5 billion).

The total investment for the plant stands at €10 billion, making the aid package the largest approved to date under the EU Chips Act. Notably, this marks the first such project in Germany and the inaugural TSMC venture in Europe. The facility is poised to bolster Europe’s semiconductor supply chain, enhancing its resilience against potential chip shortages, like those experienced during the COVID-19 pandemic.

“This is a true win-win situation for all of us,” said Ursula von der Leyen, President of the EU Commission, during a ceremony in Dresden, which lies at the heart of Germany’s “Silicon Saxony,” a region renowned for its chip manufacturing. German Chancellor Olaf Scholz echoed this sentiment, highlighting the strategic importance of securing semiconductor access for Germany’s future.

Economy Minister Robert Habeck assured that despite the German government’s recent budgetary challenges, every effort would be made to ensure that the plant meets its production timeline, with operations slated to begin in 2027.

TSMC has formed a joint venture, the European Semiconductor Manufacturing Company (ESMC), to oversee the plant’s construction. As per Reuters, European companies Robert Bosch, Infineon, and NXP have each acquired a 10% stake in the venture. TSMC’s CEO, C.C. Wei, emphasized the importance of the plant in bringing the company closer to its European customers.

The EU Commission stipulated that ESMC must ensure access to smaller companies and academic institutions. The plant will operate as an open foundry, allowing any customer, including non-shareholders, to place orders for chip production, thus fostering broader access to semiconductor technology across Europe.

Source: Reuters