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Taiwan Semiconductor Manufacturing Co. broke ground in eastern Germany on its first European plant as the continent seeks to safeguard its chip supplies amid growing US-China tensions.\u00a0<\/p>\n
\u201cWe are dependent on semiconductors for our sustainable future technologies, but we must not be dependent on other regions of the world for the supply of semiconductors,\u201d said German Chancellor Olaf Scholz, who attended a ceremony on Tuesday to mark the start of construction of the \u20ac10 billion ($11 billion) fab in the city of Dresden. About half of the funding will be covered by state subsidies.\u00a0<\/p>\n
Germany is leading the European Union push to produce one-fifth of the world\u2019s semiconductors by 2030, with the bloc seeking to build up capacity following Covid-era disruptions and as the relationship between Washington and Beijing deteriorates. The US, Japan and others are also showering subsidies on the chip industry to localize production of the components that control everything from cutting-edge artificial intelligence to everyday gadgets.\u00a0<\/p>\n
TSMC is the world\u2019s biggest contract chipmaker, with Apple Inc. and Nvidia Corp. relying on it for their most important products. It will anchor the Dresden project with a 70% stake in the plant, which will produce chips for the automotive and industrial sectors.<\/p>\n
TSMC Chief Executive Officer C.C. Wei attended the event together with European Commission President Ursula von der Leyen and the heads of Infineon Technologies AG, NXP Semiconductors NV and Robert Bosch GmbH, which each hold a 10% stake in the venture.<\/p>\n
Scholz has emerged as Europe\u2019s biggest backer of the semiconductor industry as he seeks to promote Germany\u2019s tech sector and secure supplies of critical components for the country\u2019s manufacturing businesses.\u00a0<\/p>\n
His government plans to spend \u20ac20 billion to\u00a0bolster<\/a>\u00a0domestic chip production. That\u00a0includes\u00a0<\/a>the TSMC plant and \u20ac10 billion in aid for a planned Intel Corp. plant in Magdeburg.\u00a0<\/p>\n The EU approved Germany\u2019s \u20ac5 billion subsidy for the Dresden fab, von der Leyen said at the event.\u00a0<\/p>\n The new site will help Europe reduce its reliance on Asia for importing vital technology and comes after German carmakers including Volkswagen AG and Porsche AG expressed interest in boosting domestic chip production.<\/p>\n Production is slated to begin by the end of 2027.\u00a0<\/p>\n Semiconductor production became a top priority for governments around the world when Covid-19 lockdowns exposed how vulnerable economies are to supply chain disruptions. Chip shortages shut down car factories around the world and took years to iron out.\u00a0<\/p>\n The growing geopolitical rift between Washington and Beijing has raised the stakes. China is the biggest market for semiconductors and is seeking to produce more, and more sophisticated, chips domestically. The US has responded by attempting to limit its development with\u00a0export controls<\/a>\u00a0and\u00a0tariffs<\/a>, citing national security concerns. \u00a0<\/p>\n Tensions over Taiwan, where the bulk of TSMC\u2019s production is based, have contributed to the company\u2019s expansion abroad. Beijing considers Taiwan a part of its territory, and an economic blockade or conflict over the island would massively disrupt the global supply chain.\u00a0<\/p>\n This year TSMC opened its\u00a0first plant<\/a>\u00a0in Japan and it has\u00a0pledged<\/a>\u00a0to build three advanced plants in the US state of Arizona with total investments exceeding $65 billion.<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>High-level insights for high-powered executives. Subscribe to the CEO Daily newsletter for free today. Subscribe now<\/a>.<\/div>\n