TSMC ‘Mulls First EU Chip Plant’ In Dresden

TSMC, the world’s biggest contract chipmaker, is reportedly in advanced talks to build its first European plant in Dresden as governments around the world push for a more diversified supply base of critical microchips.

A senior Japanese politician said TSMC is also considering building a second plant in that country, in addition to one it is currently constructing there.

The Dresden plant would allow TSMC to tap into growing demand for automobile chips, according to the Financial Times.

The paper, citing unnamed sources, said the company was sending an executive team to Germany in early 2023 to assess the level of government support for the project as well as the capacity of the local supply chain to meet the plant’s needs.

Car chips

It is to be the second trip to Germany in six months by TSMC executives and the company is expected to make a final decision on the matter soon after.

The plant would require billions in investment and construction could begin as early as 2024.

EU customers reportedly asked TSMC last year to consider building a plant within the bloc, but the firm halted an initial review after the invasion of Ukraine.

The decision is motivated by the rising demand for automobile chips, although Europe, the Middle East and Africa only account for about 6 percent of TSMC’s sales, compared to 65 percent from North America.

Diversification

The plant would focus on 22-nanometre and 28-nanometre chips, similar to the plant TSMC is building with Sony in southern Japan.

TSMC said “no possibility” was being ruled out with regard to a potential Dresden plant.

Intel has committed to building a 17 billion euro (£15bn) plant in the city of Magdeburg but has asked for additional German government support due to rising costs.

The EU earlier this year approved 43bn euros in subsidies to attract chipmakers, while the US’ Chips Act, passed in July, makes available some $200bn in investment into domestic chipmaking.

Japan investment

Yoshihiro Seki, a senior politician within Japan’s ruling Liberal Democratic Party, told Reuters on Friday that TSMC was “looking into further investments in Japan” and urged the government to create a favourable environment for them to do so.

TSMC said it did not rule out any possibility for Japan but that there were as yet no concrete plans for an additional plant.