Power Semiconductors

TSMC commits to German semiconductor fab

09 August 2023
The 12-inch wafer fab will be a joint venture with three chipmakers based in Europe and will help in the investment of the semiconductor facility. Source: TSMC

Pure play foundry Taiwan Semiconductor Manufacturing Co. (TSMC) officially will build a new semiconductor fab in Dresden, Germany, that will be a joint venture with European chipmakers Infineon Technologies, NXP Semiconductors and Robert Bosch Gmbh.

It was reported in May that the $11 billion chip fab would be in Saxony, Germany, however, the location has changed to Dresden.

The joint venture, called European Semiconductor Manufacturing Company (ESMC), will build the 300 mm advanced chip fab to support future capacity needs of the automotive and industrial sectors. The project is planned to receive funding from the European Chips Act. However, according to a report from Reuters, TSMC will commit $3.8 billion of its own funding to the factory. This will be TSMC’s first European chip fab.

The planned fab will have a monthly production capacity of 40,000 300 mm wafers on TSMC’s 28/22 nanometer planar CMOS and 16/12 nm FinFET process technology. TSMC said it will create about 2,000 direct high-tech jobs and ESMC aims to begin construction on the fab in the second half of next year with a production date slated at the end of 2027.

Under the JV, 70% of the fab will be owned by TSMC, with Bosch, Infineon and NXP each holding a 10% equity stake. The fab will be operated by TSMC.

Like Japan fab

The JV in Germany has many similarities to TSMC’s semiconductor fab it is building in Japan. There, TSMC also formed a joint venture with chipmakers to help cover the cost of building the fab on its own and is relying on government subsidies to help with construction costs.

The Japanese fab, which broke ground last year with an investment of $8.6 billion, includes investment from Sony Semiconductors and Denso Corp. with each company having a stake in the joint venture.

For Sony, the investment in the fab means it will receive a stable supply of logic wafers and Denso will receive a stable supply of semiconductors for its automotive sector. Given the two plus year semiconductor shortage the industry is just getting over, investing now to secure supply in the future makes sense to these vendors.

In the German fab, Bosch, Infineon and NXP are heavily involved in supplying semiconductors to the automotive and industrial sectors including bandgap technologies like silicon carbide. Considering TSMC said this fab will focus on those two chip sectors, this will likely give these three companies guaranteed supply of manufactured semiconductors in the supply chain.

Already funded

Since the inception of the European Chips Act, numerous semiconductor manufacturing projects have taken off. In April, the European Union agreed to a $47 billion investment plan to accelerate chip making in the region.

Since the announcement of the European Chips Act, Intel has become a big investor in the region. First, it pledged to invest $18.6 billion for a mega-site in the Magdeburg location as part of a spending spree that will cover some $87 billion over the next decade and numerous countries.

This will include the fabs in Germany, a new design hub in France, a back-end packaging and assembly plant in Italy and expanded foundry services in Poland, Ireland and Spain.

Additional projects include:

To contact the author of this article, email PBrown@globalspec.com

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