The EU Commission has approved a €5 billion ($5.5bn) state aid package to support TSMC’s new chip fab in Dresden, Germany.
The funding represents the biggest financial package approved under the EU Chips Act to date. The plant, which will be TSMC’s first European fab, is the first project in Germany to receive Chips Act-backed support.
Dubbed ESMC (European Semiconductor Manufacturing Company), the facility is a collaborative effort between TSMC and NXP, Infineon, and Bosch, the latter of which will each own a 10 percent stake in the plant.
Speaking at the groundbreaking ceremony on August 20, EU Commission President Ursula von der Leyen described the project as a “true win-win situation for all of us,” with German Chancellor Olaf Scholz adding that providing Germany with access to semiconductors is a “central issue” for the country’s government.
The total cost of the project is expected to be more than $10bn, with the plant due to be operational by 2027. When complete, the site will produce 40,000 wafers a month. However, TSMC has previously said the fab will not be used to manufacture the company’s most cutting-edge chips, instead focusing on 28nm, 22nm, and 16/12m nodes.
Christian Koitzsch, former SVP and Dresden plant manager at Bosch, has been hired by TSMC to manage operations at the site.
In addition to the Dresden fab, TSMC has also invested $65bn to build three chip fabs in the US state of Arizona and is planning to open a second semiconductor fab in Kumamoto, Japan.
Approved in April 2023, the €43 billion ($47bn) EU Chips Act was established with the intention of doubling the EU’s global market share in semiconductors from 10 percent to at least 20 percent by 2030.
Originally set to focus only on high-end chips, it has since expanded to include older chips and research and design facilities.
Earlier this year, the EU announced it had awarded Chips Act funding to STMicroelectronics for its silicon carbide chip manufacturing facility in Catania, Italy, and was financially backing an Imec-hosted pilot line, dubbed NanoIC, to develop and test new components including sub-2nm chips.
US chipmaker Onsemi also previously announced plans to establish a silicon carbide manufacturing facility in the Czech Republic however, any financial incentives provided to Onsemi under the EU Chips Act have not been disclosed.
