Germany to Subsidize TSMC-Led Chip Factory in Dresden with €5 Billion Support

Credit: Claudio Mota/Pexels

Germany’s Federal Ministry of Economics announced it will provide up to €5 billion in subsidies over several years to support a semiconductor factory in Dresden, a joint project led by Taiwan Semiconductor Manufacturing Company (TSMC) alongside Bosch, Infineon, and NXP. This state aid constitutes roughly half of the factory’s €10 billion investment, with the remaining funding sourced from private contributions by the involved companies.

The agreement, finalized between Germany’s Ministry of Economic Affairs (BMWK) and the companies, comes after the European Commission approved the funding under state aid rules in August 2024. The project aligns with the European Chips Act, which aims to boost semiconductor production within the EU and raise its share of global output to 20% by 2030.

Groundbreaking Milestone for European Semiconductor Industry

The joint venture, named European Semiconductor Manufacturing Company (ESMC), is majority-owned by TSMC (70%), with Bosch, Infineon, and NXP each holding 10%. The Dresden facility, which broke ground this past summer, is expected to begin production in 2027, reaching a capacity of 40,000 wafers per month by 2029. These 300 mm wafers will primarily serve the automotive and industrial sectors, addressing growing demand for chips used in systems like driver assistance and infotainment.

“This is a landmark investment for Germany, driving competitiveness, innovation, and technological sovereignty,” said German Economics Minister Robert Habeck. “The Dresden plant will bolster our supply chain independence and create approximately 2,000 direct jobs while cementing our partnership with Taiwan.”

Enhanced Supply Chain Security and Strategic Role

The project marks the first German initiative approved under the European Chips Act and is currently the EU’s largest such endeavor. The facility will focus on 12-28 mm technology nodes, addressing a production gap within Europe, where these chips have predominantly been imported from Asia and the U.S.

C.C. Wei, Chairman and CEO of TSMC, underscored the significance of the collaboration: “This partnership strengthens the European semiconductor ecosystem. Our plant in Dresden will meet the demands of our European partners, and we’re deeply grateful to the German government for their support.”

Preferential production access will be granted to small and medium enterprises and start-ups, ensuring supply prioritization for Germany and the EU during crises. The initiative underscores Europe’s commitment to enhancing its semiconductor manufacturing capabilities while reinforcing the economic ties between Germany and Taiwan.

Source: bmwk.de

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