Chip factory as Dresden joint venture
Together with its partner companies Infineon, Bosch and NXP, chip giant TSMC from Taiwan is building a new semiconductor plant in Dresden. An investment volume of more than 10 billion euros is planned, with the exact amount depending on government funding. The Taiwanese are contributing 3.5 billion euros in equity capital, and Infineon is to contribute around 500 million euros. The three partners are to receive minority shares of 10%.
Plans for 2000 new jobs
In its "Chips Act", the EU has explicitly provided for the promotion of semiconductor production in Europe. In this respect, it is likely that the planned subsidies will be approved by the EU. The exact amount of Germany's own subsidies depends on the level of these subsidies - up to 5 billion euros are currently being discussed.
In this respect, it is not surprising when TSMC CEO C. C. Wei describes Europe as a very attractive location for innovations in the semiconductor sector. A production capacity of 40,000 so-called wafers per month is planned for the emerging chip plant, with the focus on the automotive industry as a customer.
Although this currently accounts for only about 7% of global chip production, it is an attractive market for investors, as the share of semiconductors is expected to more than double (about 16%) due to the rapid growth in demand for electric cars. The new factory is expected to create about 2000 new jobs, 10% of which will be filled by Taiwanese. Construction is projected to begin in the second half of 2024, with production starting in 2027.
Benefit for automotive industry manageable
While a representative of the German Association of the Automotive Industry (VDA) welcomed the planned construction of the semiconductor factory, he also dampened overly lofty expectations. The demand for semiconductors in the automotive industry will most likely triple by 2030, making the automotive industry one of the three most important customers for semiconductors. Further capacity expansion is therefore urgently needed to ramp up electromobility.
On the other hand, the semiconductors produced in the planned plant would not correspond to the type demanded by the majority of the automotive industry - semiconductors with a node size of at least 90 nanometers would be needed. However, the Taiwanese plant is not designed for this.
Saxony as an attractive technology location
In the political arena, the response to the new plant is unanimously positive. For example, German Chancellor Olaf Scholz described the plans as an important contribution to a technologically sustainable Germany. He said that this was a decisive step towards making Germany an attractive semiconductor location. Economics Minister Robert Habeck stressed the importance of such decisions in terms of making Germany and Europe more independent of other continents.
Not surprisingly, Michael Kretschmer (CDU), the Minister President of Saxony, also welcomed the initiative of TSMC and its partners in the state capital and considered it a success of a successful location policy. The planned construction of the Taiwanese chip manufacturer and its European partners is an important step after the settlement of Infineon in Dresden and at the same time a proof of a greater sovereignty of Europe in the location competition.
Up to 20 billion euros from the federal government for more independence
But Saxony is not the only state to receive major investments - just recently, the die was cast in favor of the U.S. company Intel settling in Magdeburg, with government subsidies expected to amount to around 10 billion euros. In total, the federal government has announced subsidies of up to 20 billion to warm up Intel, Infineon and other companies in the semiconductor industry to Germany as a business location. And two other U.S. companies are also considering investing in Germany: Vishay, for example, is planning to build a chip factory in Itzehoe, while Wolfspeed wants to invest in Saarland.
Finally, Bosch is expanding its semiconductor production in the existing plants in Reutlingen and Dresden at a cost of 3 billion euros by 2026. On the one hand, this is intended to strengthen independence from the U.S. and Asia. On the other hand, from the companies' point of view, the investments are intended to ensure security with regard to the supply chains.
For the major investor TSMC, independence also plays an important role: Due to a possibly threatening escalation in the dispute with China over the "renegade province of Taiwan," the initiative stems from a need for supply security, since a predominant part of the chips produced today comes from China, Japan and South Korea in addition to Taiwan. TSMC is therefore also investing in Japan and the USA.
Further investments planned in Europe
Another investment in Europe is currently under discussion in South Korea: Following the Chancellor's visit to Seoul, Samsung is looking into building a plant. And Global Foundries, a competitor of TSMC, is also currently considering setting up a plant in Germany. In addition, the company is investing in a factory in southeastern France together with STMirco, a French- and Italian-owned group. Both here and at a production site planned for Sicily, the state is assuming almost half of the costs in each case.
Source: manager-magazin.de, 08.08.2023
Image: Michael Schwarzenberger at Pixabay
