Why choose Germany?, TSMC will open its first factory in Europe. Germany | Europe opens its first factory | TSMC
This will be TSMC's first factory opened in Europe. However, it has been proven that building TSMC factories overseas is not an easy task.
"Main battlefield"
On the same day, TSMC announced the decision to build a factory together with three European technology companies, namely Bosch, a German automotive technology and service provider, Infineon, a large German chip manufacturer, and NXP, a Dutch semiconductor company.
It is reported that TSMC will invest 3.499 billion euros in its subsidiary, European Semiconductor Manufacturing Company, and hold a 70% stake. Three European technology companies will each hold a 10% stake.
The new factory will be located in Dresden, the capital of Saxony, Germany. It is reported that Saxony was once an electronics industry center during the East German period, with a heritage of precision craftsmanship. Nowadays, Saxony is also a high-tech product manufacturing base, which has attracted multiple chip manufacturers to settle in and is known as the "Silicon Valley".
The arrival of TSMC is expected to become the largest single investment in the history of Saxony. The total cost of constructing this factory is estimated to be approximately 10 billion euros. German media reported that the German government plans to provide 5 billion euros. TSMC also stated that this project has received strong support from the European Union and the German government. The Financial Times quoted the German Ministry of Economy as saying that the support provided by the German side complies with the provisions of the EU's Chip Act.
TSMC's factory in Germany plans to start construction in the second half of 2024 and start production in 2027, with a monthly production of approximately 40000 wafers.
There are reports that TSMC will mainly produce older generation chips that the automotive industry prefers in Germany, rather than chips in cutting-edge fields. Driven by the rise of electric vehicles and autonomous driving applications, the demand for chips in the automotive industry is increasing day by day.
German Chancellor Scholz welcomed TSMC's arrival, stating that Germany may be becoming the main battlefield for European semiconductor production.
"This is crucial for the resilience of production structures around the world, as well as for the future survival capability of our European continent. Of course, it is particularly important for Germany's future survival capability."
German Economy Minister Habeck looks forward to the formation of a true semiconductor manufacturing ecosystem in the local area, which will bring significant benefits to mechanical manufacturers and skilled personnel.
Habeck also praised this investment as a manifestation of confidence in the German economy and helping to ensure chip supply for Germany and Europe.
Saxony Governor Michael Kreichmer said that the arrival of TSMC will have an impact on the entire region. This will directly or indirectly bring billions of euros in investment and a large number of job opportunities. TSMC expects that building the factory will directly bring 2000 high-tech professional jobs to the local area.
EU Industrial Commissioner Thierry Brighton praised TSMC's arrival as a reflection of the EU's implementation of the Chip Act, which helps strengthen the security of chip supply in industries such as European automobiles.
TSMC President Wei Zhejia said, "The investment in Dresden demonstrates TSMC's commitment to meeting customers' strategic capabilities and technological needs."
Planning layout
In fact, attracting TSMC to set up factories this time is only a part of Germany and even Europe's layout in the chip manufacturing industry.
In an increasingly technology dependent world, chips have become essential for driving many things such as computers, smartphones, and even weapons.
However, in recent years, the spread of the COVID-19 has led to a global shortage of chips and high prices, which has caused varying degrees of impact on various industries in various countries, including European machinery manufacturers, highlighting the importance of "self-sufficiency".
At the same time, countries such as the United States are pushing TSMC to transfer talent and production capacity under the pretext of "Taiwan Strait security risks".
Last month, the European Parliament passed the Chip Act, aiming to increase the EU's share of global chip production from the current 10% to 20% by 2030 by attracting investment and building capacity.
For Germany, the largest economy and manufacturing country in Europe, chip supply security is particularly important. Some comments suggest that if the German automotive industry wants to maintain global competitiveness, it must develop the domestic semiconductor industry. The arrival of TSMC is crucial for the German government's ambition to cultivate the domestic semiconductor industry. It is reported that the German side has been striving for this leading chip manufacturing company to establish a factory in Germany since 2021.
In addition, Germany has recently attracted high-tech companies such as Intel and Wolfspeed to set up factories. There are reports that Berlin will provide nearly 10 billion euros in Intel's plan to invest nearly 30 billion euros in building two factories.
TSMC seems to have shown a trend of diversifying its production locations in recent years. In addition to mainland China and Taiwan, TSMC is currently establishing chip production plants in the United States and Japan, and may open more overseas production plants in the future.
Public opinion believes that TSMC has two main considerations. One is to respond to customers' concerns about the tense geopolitical situation. The second is to prevent international customers from turning to competitors such as Intel and Samsung.
Worried
However, TSMC's establishment of factories in Germany and the development of the German chip industry face many challenges, including high prices and a shortage of skilled talents.
Against the backdrop of the Ukraine crisis, the German economy has been hit by high inflation, which has raised concerns about the country's economic slowdown and "de industrialization".
Meanwhile, Saxony had over 25000 job vacancies last year, particularly in the fields of electronics, computer science, and software development. Many German manufacturers have expressed a serious lack of skilled personnel, especially in the southern and eastern regions.
In fact, TSMC frequently faces labor issues when building factories overseas. TSMC confirmed last month that due to a lack of professional personnel, its production plan for its factory in Arizona, USA will be delayed by one year.There are also reports that the relationship between TSMC and American workers is tense due to cultural differences.
Previously, TSMC had expressed concerns about the lack of chip manufacturing talent and high factory construction costs in the United States, resulting in a lukewarm response to setting up factories in the United States.
Compared to other regions, it is more difficult for Saxony to attract foreign workers, as far right political parties holding anti immigration positions have some influence in the local area. Against the backdrop of holding local elections next year, Kretschmer faces severe challenges from far right political parties.
Kreichmer emphasized the importance of making Germany an immigrant country. He also stated that in order to assist TSMC in producing chips in Germany, thousands of professional and skilled personnel need to be trained, which requires a considerable amount of funding.
At the company's annual shareholder meeting held in June this year, TSMC Chairman Liu Deyin pointed out that Germany's supply chain ecosystem and labor force are "our two biggest concerns.".
"There are indeed some gaps," Liu Deyin said, but the German government has promised to establish a relevant system in a short period of time.
According to reports, the German government's approach of providing huge support to attract chip giants is controversial. For example, Berlin's offer of nearly 10 billion euros to Intel has raised doubts - is this investment worth it?