TSMC plant in Dresden: chips for Europe from the Taiwanese giant – DW – 08/20/2024

Dresden is consolidating its status as a European center for microelectronics. The Taiwanese company TSMC, one of the leaders in the global semiconductor industry, has chosen East German “Silicon Saxony” to build its first plant in Europe. THEN Dresden August 20, corporate head CC Wei, Chancellor of Germany Olaf Scholz (Olaf Scholz) and the President of the European Commission Ursula von der Leyen (Ursula von der Leyen) symbolic start of the construction of a plant worth 10 billion euros. Already in 2027, it should start supplying microchips mainly to the European car industry.

The largest project in the history of Silicon Saxony

This is the largest investment project in history the Dresden chip industrywhose foundation dates back to GDR set up the Robotron plant. After the reunification of Germany, the presence of traditions, qualified workers and specialized educational institutions attracted people to the capital of the federal state. Saxony There are a large number of microelectronics companies from different countries. As a result, today a third of all European semiconductors are made here. For marketing purposes, the resulting industrial cluster began to be known as “Silicon Saxony” after the analogy with the Californian Silicon Valley – a famous high-tech center in the USA.

Major investors in Silicon Saxony include German microelectronics leader Infineon (formerly the semiconductor division of Siemens), German technology belongs to Bosch and the Dutch company NXP Semiconductors (formerly part of the Philips concern).

TSMC’s chip plant to open in February 2024 in the Japanese city of KumamotoPhoto: The Yomiuri Shimbun via AP Images/photo

These three companies partnered with TSMC (Taiwan Semiconductor Manufacturing Company) in a joint venture called ESMC (European Semiconductor Manufacturing Company). Each partner received 10% of the joint venture’s capital, so the Taiwanese investor holds 70%. A new plant will be built next to the plant, which became operational in 2021 for the production of Bosch chips, which cost the concern around 1 billion euros.

And the construction and, more importantly, equipping the ESMC equipment with the latest equipment will cost 10 billion euros. However, the joint venture partners will invest only 5 billion euros, the second half will be provided as subsidies by the German government. Such large subsidies needed approval from the European Commission in Brussels, it came on the morning of August 20, Ursula von der Leyen took it to the ceremony.

Why do the European Union and Germany need chips so much?

However, approval was expected: the European Union was far behind the United States and especially from Asia in the chip industry and recently set a strategic goal to increase the EU’s share of global microprocessor production from the current level of around 10% to at least 20% by 2030. Thus the development of the European semiconductor industry has become one of the main guidelines in EU business policy.

The course towards a significant increase in production capacity in this area was taken under the impression of both major chip shortagewhich arose in Europe due to lockdowns during the COVID-19 pandemic, which disrupted well-functioning supply chains, and growing tensions between China and Taiwan. In the event of a military conflict between them, the EU may lose the supply of chips from the Taiwanese and Chinese TSMC factories.

The development of the semiconductor industry has also become a major focus of industrial policy in Germany, which is largely due to the fact that such a key sector of the German economy as the automotive industry needs more and more chips as it moves into production. of electric vehicles and including various automated driving functions.

The site for the construction of the ESMC joint venture plant next to the Bosch chip plant near Dresden has been selected in the fall of 2023 Photo: Sebastian Kahnert / photo alliance / dpa

The ESMC plant now under construction will create around 2,000 highly skilled and therefore well paid jobs. However, “every job at a chip manufacturer leads to the creation of three jobs at suppliers and service companies,” said Frank Bösenberg, head of the Silicon Saxony business association, in an interview with the economic newspaper Handelsblatt.

The TSCM investment project will therefore significantly boost the labor market in Saxony and the development of high-tech industrial production in Dresden and its surroundings. “The talk about the death of German industry is unbelievable for us here,” stressed Frank Boesenberg, pointing to the increasing number of publications about it. the deindustrialization of Germany.

The association he leads is developing from the fact that the number of jobs in microelectronics and software developers in the sector will grow by 25% by 2030 and exceed 100,000 so it may be e the problem of finding suitable employees.

Are Intel and Wolfspeed projects in doubt?

However, according to many critics, the multi-billion dollar government subsidies promised to the Taiwanese investor and his partners for building the chip plant are too large or even unnecessary. There is no need to accept blackmail by transnational companies; it is better to invest more money in personnel training, skeptics say. In addition, the federal and state authorities promised large subsidies not only to TSCM, but also to Intel.

This American corporation, which is also part of the group of world electronics leaders, announced two years ago construction near the eastern German city of Magdeburg by 2027, two chip production plants with a total value of 30 billion euros. For this mega project, she asked for a subsidy of 10 billion euros – and she got permission from the German authorities.

This is what chip factories’ products look like Photo: Bosch

However, Intel is currently experiencing serious financial problems, which has led the group’s management to announce a program of workforce reductions and investments worldwide. In this situation, there is more doubt about the prospects for the project in Magdeburg. Anyway, apart from the construction of roads into the large site which has already been prepared, no other work is being done there at the moment.

The failure of the project would be a serious blow to the East German state Saxony-Anhaltwhich connects to the future of Intel big plans for the development of the entire sector, but at the same time this would allow the German authorities to save subsidies for the astronomical sum of 10 billion euros. What would be better is a false point.

In addition, about half a billion euros in government subsidies were promised to the Americans chip manufacturer Wolfspeedplans to build the world’s largest plant for the production of silicon carbide-based semiconductors in the western German state of Saarland. There is even more to cleaning the construction site closed coal power plant demolishedbut this US investor also had to apply austerity, so this project also stopped, and with it the payment of subsidies.

Infineon is also building a new plant in Dresden

It is even more important that the construction of the plant in Dresden has now begun. In parallel with the ESCM project, the participating companies Bosch and Infineon are expanding their production facilities in Silicon Saxony. However, in the case of Infineon, the word expansion does not accurately reflect the extent of what is happening. Company building a new plant there worth 5 billion euroswhich should start making chips in autumn 2026 and create 1,000 new jobs.