TSMC Breaks Ground On First European Chip Fab At Dresden In Germany, $11 Billion Investment To Power Auto Sector

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, has officially commenced construction on its first semiconductor fabrication facility in Europe.

The groundbreaking ceremony, held in Dresden, Germany, was attended by notable figures including TSMC chairman and CEO C C Wei, European Commission President Ursula von der Leyen, and German Chancellor Olaf Scholz.

The construction of the facility is set to begin this year, with operations expected to commence by the end of 2027. The project, which is estimated to cost over 10 billion euros ($11.1 billion), will be financed through a combination of equity injection, debt borrowing and government supprot

As part of this, the European Commission has approved, under EU State aid rules, a €5 billion German measure to support the construction and operation of the semiconductor fab.

The facility will be managed by European Semiconductor Manufacturing Company (ESMC), a joint venture in which TSMC holds a 70 per cent stake. The remaining 30 per cent is shared equally among Bosch, a leading auto parts manufacturer; Infineon Technologies, a prominent German automotive chip company; and NXP Semiconductors from the Netherlands. Christian Koitzsch, formerly of Bosch, leads the subsidiary.

This new fab will focus on producing mature node processors, specifically 28nm, 22nm, and 16nm/12nm chips, with a projected monthly output of 40,000 300mm (12-inch) wafers. The facility is expected to create around 2,000 high-tech jobs in the region.

Although these nodes are not at the forefront of semiconductor technology, there remains substantial demand for 22-28nm and 12-16nm chips across various industries, particularly in consumer electronics and automotive sectors.

A steady supply of these semiconductors is essential for auto manufacturing, a key industry for both Europe and Germany. While the market is currently experiencing a downturn, the importance of chips is expected to grow significantly in the long term, driven by the shift to electric vehicles and the wider adoption of advanced driver assistance systems.

Last year, Infineon led the global automotive chip market, followed by NXP, with Bosch ranking seventh, according to Semiconductor Intelligence. Both Infineon and NXP rely on TSMC for the manufacturing of microcontrollers and other products.

The Dresden fab marks TSMC's third overseas venture since 2020, following its $40 billion factory in Arizona, USA, and its $8 billion facility in Kumamoto, Japan. While TSMC moves forward with its plans in Germany, Intel's 17 billion euro project to build a cutting-edge semiconductor plant has encountered delays.

In June of last year, Germany and Intel signed an agreement to pave the way for the construction of a state-of-the-art semiconductor facility in Magdeburg, located in the eastern state of Saxony-Anhalt.