TSMC, the global leader in semiconductor manufacturing, has officially begun construction on its inaugural European factory, located in Dresden, Germany. This strategic move marks a significant expansion outside of Asia, where the majority of TSMC's production has traditionally been concentrated, particularly in Taiwan.
The Dresden factory, part of a €10 billion investment, is being developed in partnership with Dutch company NXP and German firms Infineon and Bosch, with TSMC holding a 70% stake in the project. This new facility will specialise in manufacturing semiconductors for the automotive industry, a critical sector for Germany as it transitions to electric vehicles. The plant is expected to be operational by the end of 2027 and will have a monthly production capacity of 40,000 advanced 300 mm silicon wafers. The project is anticipated to create approximately 2,000 direct jobs.
German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen were present at the groundbreaking ceremony, underscoring the project's importance for Europe's technological sovereignty. The initiative is part of a broader European strategy to enhance local production of critical components, reducing reliance on imports from Asia and the United States, especially in the wake of global supply chain disruptions.
Berlin has provided significant financial support, offering up to €5 billion in subsidies to attract TSMC. This move is aligned with the European Union's broader semiconductor strategy, known as the "Chips Act," which aims to double Europe's share of the global semiconductor market from 10% to 20% by 2030.
TSMC's expansion into Europe is part of its broader strategy to diversify its manufacturing base globally, with new factories also under construction in the United States and Japan. These efforts are designed to protect the company's operations amid geopolitical tensions and to capitalise on substantial government subsidies aimed at boosting domestic semiconductor production.
The company's growth is also being fuelled by the increasing demand for semiconductors driven by the rise of artificial intelligence (AI) technologies. TSMC reported a 33% increase in revenue in June 2024, reflecting the growing need for advanced chips to power AI applications and a wide range of consumer electronics.
