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High-tech investor: Taiwanese chip manufacturer TSMC is coming to Germany

Photo: IMAGO/Jakub Porzycki / IMAGO/NurPhoto

Who is TSMC?

The Taiwan Semiconductor Manufacturing Company (TSMC) is a publicly traded chip manufacturer that manufactures chips on behalf of other companies such as Apple, Infineon or Nvidia. TSMC is a global leader in this "foundry" business and is one of only a few companies in the world to be able to produce the latest generation of high-performance chips, such as those found in the latest Apple smartphones.

In 2022, the Taiwanese generated a net profit of more than $75 billion on sales of more than $34 billion. With a market capitalization of almost 500 billion dollars, TSMC, which was once created as a joint venture and in which the Dutch Philips Group also had a stake, is one of the most valuable companies in the world.

What is planned in Dresden?

In the course of global expansion, a new production facility is to be built in Dresden, which will produce chips in the range of 12 to 28 nanometers, especially for the European automotive industry. This is to prevent another serious chip shortage in the automotive industry in Germany, which led to production lines in car factories during the corona pandemic and several million cars not being able to be manufactured.

According to the report, 40,000 wafers are to be produced per month. In the case of TSMC Dresden, these are 300 millimeter mm silicon plates, which are then cut into the smallest so-called "dies", uncoated "naked chips", and processed into finished microchips. TSMC is also currently planning or building new plants in Japan and the USA. However, the company continues to manufacture the very latest and most powerful chips only in Taiwan. The Taiwanese government hopes that this "silicon shield" will provide the country with protection from Chinese aggression.

Who's on board?

The factory in Dresden is planned as a joint venture – together with Infineon, Bosch and NXP. TSMC is expected to hold 70 percent of the shares in the joint venture as a leading strategic partner. Infineon, Bosch and NXP each 10 percent.

How much money does TSMC want to invest in the site?

According to current figures, about ten billion euros. However, since negotiations with the federal government have not yet been concluded, the sum may still change, as in the case of Intel, depending on the subsidies.

How much does the federal government contribute?

According to official figures, "up to five billion euros"

How many jobs will this create?

Around 2000 jobs. In order to help set up the plant, up to 200 experienced personnel are to be flown in from Taiwan in the initial period.

Where exactly is the whole thing going?

The new factory is to be built in the Aiportpark industrial area near Dresden Airport on a 50-hectare site on which the tobacco company Philip Morris originally wanted to build years ago. The first factory is tobe around 25 hectares in size, which would still leave room for expansion.

What's the schedule?

If all goes well, the groundbreaking ceremony is scheduled for the third quarter of 2024. The plant could thenstart production in late 2027, early 2028. However, the preparatory work/initial considerations for a factory building date back to 2021.

What's next?

After the official decision, the German government and TSMC now have to sign a memorandum of understanding, which also deals with the planned funding. The Free State of Saxony has also yet to officially agree on the expansion of the infrastructure by memorandum with TSMC. Ultimately, however, the EU Commission must give the green light for the billions in subsidies under the Chips Act.

What challenges are still there?

Many. In order to attract enough workers for the booming chip industry, which will need thousands of new workers in Dresden alone in the coming years, leading chip manufacturers want to cooperate with official sites on training, for example. TU Dresden's cooperation with Taiwan is also to be strengthened. In addition, infrastructure must be provided – water and sewerage, housing, daycare centers and schools are also part of it.

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