Germany Gets Big Two Chip Behemoths TSMC, Intel To Sign Up For Domestic Semiconductor Fabs By Offering Over $15 Billion In Subsidies

Taiwan Semiconductor Manufacturing Co, the world's largest contract chip manufacturer, on Tuesday (Aug 9) announced that it would set up a fab factory in Dresden, Germany, in partnership with Robert Bosch, Infineon Technologies and NXP Semiconductors.

While TSMC will hold a 70% stake in the proposed European Semiconductor Manufacturing Company (ESMC), Infineon Technologies and Robert Bosch (both German companies) and NXP Semiconductors of the Netherlands will each own a 10% equity stake.

The total investment to set up the fab factory is estimated to be over 10 billion euros (close to $11 billion).

While TSMC will invest up to 3.47 billion euros ($3.8 billion), the German government will subsidise 5 billion euros from its climate and transformation fund to construct the fab.

ESMC aims to begin construction of the fab in the second half of 2024, with production targeted to commence by the end of 2027.

Though not leading edge, 22-28-nanometer and 12-16-nanometer grade technology continues to have widespread demand from consumer devices to cars.

Dresden fab factory is set to be TSMC's third overseas foray since 2020, coming after its $40 billion factory in the U.S. state of Arizona and its $8 billion facility in Kumamoto, Japan.

In June this year, Germany and chip behemoth Intel signed an accord paving the way to build a leading-edge semiconductor production facility in Magdeburg in the eastern state of Saxony-Anhalt.

Intel will receive subsidies worth 10 billion euros ($10.9 billion) for setting up the fab.

Chancellor Olaf Scholz hailed Intel's deal to develop two chip-making plants in Magdeburg as the biggest-ever foreign investment in Germany.