The European Semiconductor Manufacturing Company (ESMC) has commenced the construction of a new semiconductor fabrication facility in Dresden, Germany, with a total investment exceeding €10bn.
The European Commission (EC) has approved a €5bn German measure to support this initiative under EU State aid rules. This project aims to strengthen Europe’s semiconductor supply chain security, resilience, and digital sovereignty, aligning with the European Chips Act Communication, while also contributing to digital and green transitions.
“With this state-of-the-art manufacturing facility, we will bring TSMC’s advanced manufacturing capabilities within reach of our European customers and partners,” said TSMC chairman and CEO CC Wei. This, he added, “will stimulate economic development within the region and drive technological advancements across Europe.”
TSMC ventures into Europe
ESMC is a joint venture involving Taiwan Semiconductor Manufacturing Company (TSMC), Robert Bosch, Infineon Technologies, and NXP Semiconductors. It aims to address the growing demand for automotive and industrial semiconductor applications.
TSMC has a 70% stake in the semiconductor joint venture, while Robert Bosch, Infineon Technologies, and NXP Semiconductors hold 10% stake each. The Taiwanese firm will be the operator of the German chip-making plant.
The Dresden semiconductor fab will produce high-performance chips using 300mm silicon wafers, with technology nodes of 28/22nm and 16/12nm, employing FinFET technology.
It is scheduled to reach full operational capacity by 2029 and is expected to manufacture 480,000 silicon wafers annually, with a monthly production capacity of 40,000 wafers.
Designed as an open foundry, the facility will cater to a broad customer base, including those outside the shareholder group. This model supports the wider EU semiconductor ecosystem by providing access to production capacities for European small and medium enterprises (SMEs) and startups, while offering support to European universities.
For its part, ESMC claims it is committed to prioritising crisis-relevant products as mandated by the EU Chips Act Regulation and intends to apply for recognition as an Open EU Foundry.
The European Commission has acknowledged that this measure will facilitate the establishment of a unique mass-production facility for advanced semiconductor technologies in Europe. According to the Commission, aid from the German federal government is necessary to attract investment and is expected to have minimal impact on competition within the European Union (EU). ESMC has agreed to share potential profits beyond current expectations with Germany.
“This €5bn German measure will strengthen semiconductor production capacity in Europe, helping us deliver our green and digital transition and creating opportunities for high-skilled employment,” said the EC executive vice-president in charge of competition policy, Margrethe Vestager. “The measure’s open foundry model will ensure widespread access to power-efficient chips, including by smaller companies and start-ups, while limiting any potential distortion of competition.”
EU chip ambitions
The total investment for the Dresden semiconductor fab will be financed through a combination of equity, debt, and support from the EU and the German government. The facility is anticipated to create approximately 2,000 high-tech jobs.
The European Chips Act Communication, adopted on 8 February 2022, underscores the importance of investing in advanced semiconductor facilities. The broader Chips Act package, which came into effect on 21 September 2023, further emphasises this investment as part of efforts to secure the EU’s supply chain and boost the economy.
The approval of the Dresden semiconductor fabrication facility marks the fourth decision by the European Commission based on these principles.
In October 2022, the Commission endorsed an Italian measure to aid STMicroelectronics in constructing and operating a Silicon Carbide (SiC) wafer plant in Catania, utilising 150mm technology.
In April 2023, a €2.9bn French aid measure was approved to support STMicroelectronics and GlobalFoundries in building a new microchips manufacturing facility in France. Most recently, in May 2024, the Commission approved another Italian measure to assist STMicroelectronics in establishing a new integrated SiC manufacturing facility in Italy.
Read more: Arm planning to launch AI chips next year amid huge global demand
