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TSMC plans for first German chip fab with cost up to EUR 10 bn

Taiwan Semiconductor Manufacturing Co. is in talks with partners to spend as much as €10 billion ($11 billion) to build a chip fabrication plant in Saxony, Germany, according to people familiar with the matter.

The planned venture between TSMC, NXP Semiconductors NV, Robert Bosch GmbH and Infineon Technologies AG will include state subsidies and would have a budget of at least €7 billion, with the total investment likely closer to €10 billion, the people said, asking not to be identified because the information is private. A final decision has not been made and the plans could still change, they said.

TSMC is still assessing the possibility of building a plant in Europe, spokeswoman Nina Kao said, without elaborating. Spokespeople for NXP, Bosch, Infineon and Germany’s Economy Ministry declined to comment on the project.

TSMC Chairman Mark Liu told shareholders in 2021 that the chipmaker had started assessments on setting up manufacturing operations in Germany, Europe’s largest economy. The proposed European plant would focus on chips for the automotive sector, Chief Executive Officer C. C. Wei has said.

Similar projects in Germany have sought as much as 40% of their funding from subsidies as the European Union attempts to double its share of global semiconductor production by 2030. In April, the EU passed the €43 billion Chips Act to boost domestic output after supply chain disruptions during the Covid-19 pandemic and as tensions between the US and China escalate.

Any state aid would require approval from the European Commission, and the consortium is in talks with officials over the size of the package, the people said. In Japan, where TSMC is spending $8.6 billion with partners to build a plant, it will receive about half of the funding from the government.

The facility, which TSMC could approve as soon as in August, would focus on producing 28-nanometer chips, according to some of the people. If built, it would be the company’s first fab in the EU.

TSMC is Taiwan’s biggest company and Apple Inc.’s main chipmaker. It makes the vast majority of its semiconductors in Taiwan but, as customers and governments grow increasingly concerned over geopolitical tensions and China’s military threats against the island, it has begun to build more capacity in the US and Japan.

Infineon broke ground Tuesday on a semiconductor fab in Dresden, a city in Saxony that also hosts production facilities for GlobalFoundries Inc. and Bosch. Chipmakers tend to build plants in clusters, allowing the expensive facilities to take advantage of infrastructure and workers that are already there.

The planned facility would be a major boost for the EU Chips Act, which has attracted commitments around the bloc from Intel Corp., STMicroelectronics NV and GlobalFoundries. Intel, however, has delayed the start of a major project in Germany to request more aid. Bloomberg

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