Taiwan Semiconductor forms joint venture for €10B German chip plant
PhonlamaiPhoto/iStock via Getty Images
Taiwan Semiconductor Manufacturing (NYSE:TSM), Robert Bosch GmbH, NXP Semiconductors (NASDAQ:NXPI) and Infineon Technologies (OTCQX:IFNNY) are forming a joint venture to jointly invest in European Semiconductor Manufacturing Company, or ESMC, in Dresden, Germany to provide advanced semiconductor manufacturing services.
Earlier this week, it was reported about the tentative plan of investment by the companies.
TSM said that ESMC marks an important step towards construction of a 300mm fab to boost the future capacity needs of automotive and industrial sectors.
The company added that the total investments are expected to exceed â¬10B, or roughly $11B, consisting of equity injection, debt borrowing, and help from the EU and the German government.
Taiwan Semiconductor (TSM) will own 70% of the joint venture, while Bosch, Infineon, and NXP each hold 10% a equity stake, subject to regulatory approvals and other conditions. The fab will be operated by TSM.
The final investment decision will depend on confirmation of the level of public funding for the project, which is planned under the framework of the European Chips Act.
The $47B Chips Act received final approval from the European Council in July and is aimed at doubling the continent's global market share in semiconductors to at least 20% by 2030, up from 10% presently.
"Europe is a highly promising place for semiconductor innovation, particularly in the automotive and industrial fields, and we look forward to bringing those innovations to life on our advanced silicon technology with the talent in Europe," said TSM CEO C.C. Wei.
Infineon's CEO Jochen Hanebeck noted the company will use the new capacity to serve the demand mainly of its European customers, especially in automotive and internet of things.
TSM's â¬3.5B ($3.83B) investment in Germany will steer deeper collaboration between the country and Europe, Reuters reported citing Taiwan's economy minister.
The investment in the new factory is a show of goodwill towards Europe, even as the EU has shown no interest to proceed with a Bilateral Investment Agreement Taipei has long hoped for, the report added.
"TSMC's investment in Europe will help bring even closer cooperation between Taiwan and the EU," said Taiwan Economy Minister Wang Mei-hua, when asked if signing the BIA would get more Taiwanese chipmakers to the bloc.
Taiwanese officials, while indicating that TSM's investments are a company decision, have also said that European countries should bolster ties with Taiwan if they want continued semiconductor cooperation, according to the report.
The TSM investment in Germany will require approval by Taiwan's economy ministry, and Wang noted they will also consider the company's investments at home when weighing the German plans.
The approval was likely not an issue as the plant will be making less advanced chips for the auto industry, rather than higher-end, more profitable chips for products such as AI applications, the report noted citing a source familiar with the German discussions.
U.S. tech giant Intel (INTC) is also investing big in Europe. Last year the company said it would invest about $88B (â¬80B), in chip manufacturing in Europe over the next decade, including an $18.6B mega fab in Germany. In June, the company announced plans to invest â¬30B to build two semiconductor facilities in the country.
More on TSM

Taiwan Semiconductor: I Remain Hesitantly Bullish Even After A 50% Runup
Taiwan Semiconductor: Short-Term Pain For Long-Term Gain (Rating Upgrade)