TSMC's European Expansion: €5 Billion State Aid Approved for German Chip Plant

TSMC's first chip factory in Europe gets €5B state aid from Germany

The fab will produce high-performance chips for automotive and industrial applications The European Commission today approved €5bn in German state aid to support TSMC's chip plant in Dresden -- its first in Europe. Dubbed European Semiconductor Manufacturing Company (ESMC), the fab is a joint venture between the Taiwanese chip giant, the Netherlands' NXP, and Germany's Bosch and Infineon. TSMC will own 70% of the factory, while the European chipmakers will each have a 10% equity stake. The €5bn state aid is part of the EU's Chips Act, which aims to increase the bloc's share of global chip production to 20% by 2030. It's also the biggest grant to date under the act (providing about half of the estimated +€10bn investment needed for the fab) -- and for good reasons. The first (obvious) one is TSMC's key position in the global semiconductor supply chain. The upcoming plant also meets the act's requirement of a "first-of-kind" facility that mass-develops technology which doesn't currently exist in the Union. ESMC will deliver high-performance chips, based on 300mm silicon wafers with node sizes covering 28/22nm and 16/12nm. It will use field-effect transistor (FinFET) technology -- a type of transistor design that improves performance and energy efficiency. Expected to reach full operational capacity by 2029, the fab will produce 480,000 silicon wafers per year. It will provide semiconductors for automotive and industrial applications. As part of the deal, ESMC will operate as an "open foundry," meaning that any customer (besides the four shareholders) will be able to order specific chips. "[This] will ensure widespread access to power-efficient chips, including by smaller companies and startups, while limiting any potential distortion of competition," EU competition chief Margrethe Vestager said in a statement. Attracting chip giants to the bloc, through financial incentives and favourable regulation, is a crucial part of the EU's strategy to increase domestic production. Alongside TSMC, Intel has also committed to build a €30bn mega fab in Germany for highly-advanced chips. If the plan goes through -- which is not guaranteed, given the company's recent financial woes -- the plant will deliver chips for applications such as AI and high performance computing (HPC). But amid fierce global competition and an increasingly unstable geopolitical landscape, it's unclear whether the EU will actually hit its targets.

Taiwan Semiconductor-backed firm gets EU nod for €5B German aid for chip plant

The European Commission said it has approved €5B ($5.5B) in German state aid to support the construction and operation of a new microchip manufacturing plant by European Semiconductor Manufacturing Company, or ESMC, in the German city Dresden. ESMC is a joint venture between Taiwan Semiconductor Manufacturing (NYSE:TSM), Robert Bosch GmbH, NXP Semiconductors (NXPI) and Infineon Technologies (OTCQX:IFNNY). Last year in August, TSM noted that the total investment is expected to exceed €10B, or roughly $11B, consisting of equity injection, debt borrowing, and help from the EU and the German government. The fab will be operated by TSM. The European Commission said on Tuesday that the project aims at serving the demand for automotive and industrial applications. The agency noted that the facility will be the first-of-a-kind in Europe, as currently there is no comparable mass-production plant for the specific technology features offered. ESMC will be the first open foundry that will produce high-performance chips, based on 300mm silicon wafers with 28/22nm and 16/12nm technology nodes, using field-effect transistor, or FinFET, technology with logic, mixed-signal, radio frequency and embedded non-volatile memory technology processes, according to the Commission. The facility will operate as an open foundry, meaning that any customer, not only shareholders like TSM, can place orders for specific chips. The plant, which is expected to be operating at full capacity by 2029, is anticipated to produce 480,000 silicon wafers per year. The EU regulator assessed the German measure under the European Chips Act. The EU's €43B Chips Act, which was announced in 2023, is aimed at supporting local chip making. In May, Belgium-based nanoelectronics research hub imec said that certain European research labs were expected to get €2.5B (about $2.72B) in funding under the European Chips Act to establish a pilot line to develop and test future generations of advanced chips. The U.S., China, Japan and South Korea are among countries which have stepped up efforts to boost domestic chip manufacturing to stay ahead in the AI race. In the U.S., the CHIPS Act funding aims to increase U.S. semiconductor manufacturing and research, especially in advanced semiconductors. Several companies including, Intel (INTC), SK hynix, Samsung (OTCPK:SSNLF), TSM and Micron Technology (MU) are getting funds under the act.

TSMC starts building its first billion-dollar chip plant in Europe

European Commission president Ursula von der Leyen said the plant is an 'endorsement for Europe as a global innovation powerhouse' and will create 11,000 jobs. Taiwan Semiconductor Manufacturing Company (TSMC) is building a €10bn chip plant in Dresden, Germany, the company's first in Europe. In an announcement today (20 August), the European Commission said it has approved €5bn in state aid for the European Semiconductor Manufacturing Company (ESMC), a joint venture between TSMC, Bosch, Infineon and NXP. The idea is the strengthen the security and resilience of Europe's chip supply, an objective of the EU Chips Act that came into effect last September. First proposed by the Commission last year, the act aims to increase the EU's share of global chip production from 10pc to at least 20pc by the end of the decade. It was also proposed during the global chip shortage, as a way to prevent future supply constraints. The EU approved the Act in July, just two weeks after the EU parliament adopted the €43bn act in a 587 to 10 vote with 38 abstentions. Commission president Ursula von der Leyen called the launch of the new chip plant - which is expected to create 11,000 new jobs in Germany's so-called Silicon Saxony region - an "endorsement for Europe as a global innovation powerhouse". "European chip companies will gain access to new technologies and production capacities. European industries will benefit from more reliable local supply chains, and new products that are tailored to their needs," von der Leyen said. "And at a time of growing geopolitical tensions, TSMC will also benefit from geographic diversification to Europe, better access to our European strengths, like automotive ... and to our unique single market. So this is a true win-win situation for all of us." TSMC saw its net profit grow by 36.3pc in its latest quarterly earnings over the same period last year, beating analyst estimates. The chip giant said last month that its revenue stood at NT$673.51bn in its second quarter of 2024 ended 30 June. This represents a more than 40pc rise in quarterly revenue over the same period last year. Revenue also increased 13.6pc over the previous quarter. Just a week prior to its earnings call, TSMC entered the trillion-dollar club thanks to soaring shares as a result of skyrocketing demand for AI chips. "Our business in the second quarter was supported by strong demand for our industry-leading 3nm and 5nm technologies, partially offset by continued smartphone seasonality," Wendell Huang, senior vice-president and chief financial officer at TSMC, said at the time. "Moving into third quarter 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies." In early April, the US said it was awarding TSMC billions of dollars in subsidies and loans to boost semiconductor production in the country as part of a broader goal of improving its share in the chips market. Find out how emerging tech trends are transforming tomorrow with our new podcast, Future Human: The Series. Listen now on Spotify, on Apple or wherever you get your podcasts.

EU approves biggest grant yet under Chips Act for TSMC Germany plant

"This is a true win-win situation for all of us," EU Commission's President Ursula von der Leyen said during the inauguration ceremony for the plant. German Economy Minister Robert Habeck praised the decision and said his government would maintain the fast pace of the project, which targets production in 2027, and finalise funding. ESMC is a joint venture led by TSMC, the world's largest contract chipmaker, with European chipmakers Bosch, Infineon and NXP each taking a 10% stake. The Dresden facility is forecast to cost 10 billion euros in total to build. "The facility will operate as an open foundry, meaning that any customer - including but not limited to the three other shareholders besides TSMC - can place orders for the production of specific chips," the Commission said in a statement announcing the subsidy approval. Although the ESMC plant will be making generations of chips slightly behind the most advanced technology used in AI chips and smartphones, it will add capacity in the range that is most important for automotive and other industrial applications key to European manufacturing. The plant should improve Europe's resiliency against a future chip shortage of the type experienced during the COVID pandemic. (Reporting by Sudip Kar-Gupta in Brussels and Andrey Sychev in Gdansk; Editing by Kirsten Donovan, Rachel More and David Evans)

TSMC breaks ground on €10 billion factory in Germany amid growing China-Taiwan tensions

Taiwan Semiconductor Manufacturing Co. broke ground in eastern Germany on its first European plant as the continent seeks to safeguard its chip supplies amid growing US-China tensions. "We are dependent on semiconductors for our sustainable future technologies, but we must not be dependent on other regions of the world for the supply of semiconductors," said German Chancellor Olaf Scholz, who attended a ceremony on Tuesday to mark the start of construction of the €10 billion ($11 billion) fab in the city of Dresden. About half of the funding will be covered by state subsidies. Germany is leading the European Union push to produce one-fifth of the world's semiconductors by 2030, with the bloc seeking to build up capacity following Covid-era disruptions and as the relationship between Washington and Beijing deteriorates. The US, Japan and others are also showering subsidies on the chip industry to localize production of the components that control everything from cutting-edge artificial intelligence to everyday gadgets. TSMC is the world's biggest contract chipmaker, with Apple Inc. and Nvidia Corp. relying on it for their most important products. It will anchor the Dresden project with a 70% stake in the plant, which will produce chips for the automotive and industrial sectors. TSMC Chief Executive Officer C.C. Wei attended the event together with European Commission President Ursula von der Leyen and the heads of Infineon Technologies AG, NXP Semiconductors NV and Robert Bosch GmbH, which each hold a 10% stake in the venture. Scholz has emerged as Europe's biggest backer of the semiconductor industry as he seeks to promote Germany's tech sector and secure supplies of critical components for the country's manufacturing businesses. His government plans to spend €20 billion to bolster domestic chip production. That includes the TSMC plant and €10 billion in aid for a planned Intel Corp. plant in Magdeburg. The EU approved Germany's €5 billion subsidy for the Dresden fab, von der Leyen said at the event. The new site will help Europe reduce its reliance on Asia for importing vital technology and comes after German carmakers including Volkswagen AG and Porsche AG expressed interest in boosting domestic chip production. Production is slated to begin by the end of 2027. Semiconductor production became a top priority for governments around the world when Covid-19 lockdowns exposed how vulnerable economies are to supply chain disruptions. Chip shortages shut down car factories around the world and took years to iron out. The growing geopolitical rift between Washington and Beijing has raised the stakes. China is the biggest market for semiconductors and is seeking to produce more, and more sophisticated, chips domestically. The US has responded by attempting to limit its development with export controls and tariffs, citing national security concerns. Tensions over Taiwan, where the bulk of TSMC's production is based, have contributed to the company's expansion abroad. Beijing considers Taiwan a part of its territory, and an economic blockade or conflict over the island would massively disrupt the global supply chain.