Taiwanese TSMC to build a chip factory in Dresden

It’s official, the Taiwanese chip manufacturer TSMC, the most important company in the sector on the entire planet, has decided to build a plant in Dresden, the capital of the state of Saxony. In the task it will count as partners with three other companies: the German Bosch and Infineon, and the Dutch NXP, each of which will receive 10% of the shares of the joint venture. TSMC will lead the conglomerate, and will have the remaining 70%.

“The goal is to build a modern factory for the production of semiconductors in order to be able to meet the future capacity needs of the fast-growing industrial and automotive sectors,” TSMC said in a statement.

The final amount of the investment will be decided when there is clarity about the state financing of the project. Previously there had been talk of German federal subsidies of up to 5,000 million euros, which must have the approval of Brussels. Given the huge investments required by these plants, equipped with state-of-the-art technology, this aid is common: Intel recently received a commitment from the German government that it would provide them with 10,000 million for its installation in Magdeburg, in what will be the largest investment ever seen by a foreign company in the German country.

TSMC’s future factory will have a monthly production capacity of 40,000 wafers, containing chips in the size ranges of 22 to 28 nanometers and 12 to 16 nanometers. The joint venture, called ESMC, will have around 2,000 employees. ESMC plans to start construction of the factory in the second half of 2024 and go into operation by the end of 2027.

“There will be a real ecosystem for the manufacture of semiconductors in Germany”, celebrated the Minister of Economy, Robert Habeck, echoing the decision of TSMC to build the plant in Dresden. “It will generate orders for the entire sector: for machine builders, for optical manufacturers, for skilled workers.”

The agreement allows progress in the objective that the European Commission has set for 20% of chip production to be made on the continent. And Germany, which has a powerful car industry in dire need of chips, leads the way. “Robust domestic semiconductor production is of particular importance to our global competitiveness, because semiconductors keep our world running and make the transformation to climate neutrality possible,” Habeck says.

“Without them, no computer works, no car drives, no wind or solar systems can produce energy,” he added. The project secures skilled jobs and added value for Germany. “At the same time, many companies along the value chain and user industries, from large to medium-sized companies, benefit from an investment of this magnitude.”

Minister Habeck hailed the investment as a vote of confidence in a German economy that has been hit by high energy prices following Russia’s invasion of Ukraine, which has led to an economic slowdown and fears that the first-rate industry Europe’s economic powerhouse is losing strength.

The Saxon government has described the TSMC announcement as “good news”. Together with Intel’s decision in favor of Magdeburg and Infineon’s expansion in Dresden, this agreement will give a great boost to regional development in Central Germany, explained Saxony’s Minister for Regional Development Thomas Schmidt. According to the CDU politician, the entire European economy will benefit, just at a time when it seeks to become more independent of non-European suppliers.

TSMC’s will be the largest investment in Saxony’s history, and allows state prime minister Michael Kretschmer (CDU) to hang a medal at a delicate moment for challenging the far-right Alternative for Germany party, with whom he will compete in the regional elections next year.

“This will only work if Germany becomes a country of immigrants,” Kretschmer said at a press conference, acknowledging that filling the more than 10,000 vacancies that the factory and its suppliers would generate would require new investment in training.

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