The German government expects Taiwan Semiconductor Manufacturing Co. to give the go-ahead for the construction of a €10 billion ($11 billion) facility in the eastern city of Dresden on Tuesday after a board meeting, according to people familiar with the matter.
Chancellor Olaf Scholz’s ruling coalition will provide as much as €5 billion in subsidies for the plant, which will specialize in making chips for the automotive sector, Bloomberg has reported.
The imminent TSMC approval for the new fab was first reported earlier Monday by Germany’s Handelsblatt newspaper. Spokespeople for the Economy Ministry in Berlin and the regional government of Saxony, where Dresden is located, declined to comment when contacted by Bloomberg about the article. TSMC spokeswoman Nina Kao said she has no further update.
Governments around the world are competing fiercely for new chip factories in an effort to secure more control over the manufacturing of the components critical to global supply chains.
A disruption of supplies at the height of the Covid-19 pandemic — particularly out of Asia — caused widespread shortages that rippled across industries including autos and consumer electronics, driving home the risks to all nations of depending on foreign inventories.
Germany has emerged as one of the most aggressive countries chasing after more domestic manufacturing. Scholz’s government is expected to approve a plan this week to top up a fund targeting semiconductor production, along with climate-protection measures, by about $22 billion, according to people familiar with the discussions. Intel Corp. is set to receive about $11 billion in subsidies from the government in Berlin for its own chip complex.
Taiwan-based TSMC has been in talks with partners including NXP Semiconductors NV, Robert Bosch GmbH and Infineon Technologies AG to invest in the new German venture, Bloomberg News has reported.
TSMC Chairman Mark Liu has since confirmed that his company is considering having customers hold minority stakes in the German plant, although he has not disclosed the names of the parties interested in doing so.
To mollify concerns from customers over growing tensions in the Taiwan Strait, TSMC has been expanding its overseas presence.
It has committed to creating two advanced facilities in the US state of Arizona with a total price tag of $40 billion, and it’s building a $8.6 billion plant in Japan with support from the government in Tokyo and investment from Sony Group Corp. and Denso Corp.
--With assistance from Alberto Nardelli, Lynn Doan, Agatha Cantrill and Christoph Rauwald.
(Updates with detail on TSMC expansion plans; a previous version corrected dollar amount in first deck head)
Author: Michael Nienaber, Kamil Kowalcze and Debby Wu