[News] Germany Resolves Budget Standoff, Maintains Subsidies for TSMC and Intel

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After a month of negotiations, the German government successfully resolved the budget deadlock today. Officials have confirmed that subsidies for the construction of TSMC’s and Intel’s fabs will remain unchanged. They stress that these investments will benefit the entire country.

As reported by CNA, on November 15th, the German Federal Constitutional Court declared the federal government’s redirection of the Covid pandemic emergency budget to the “Climate and Transformation Fund” unconstitutional. This fund includes subsidies for TSMC and Intel, raising concerns about potential deviations from Germany’s commitments and introducing uncertainties to the construction plans.

After a month of intense negotiations among Germany’s three ruling parties, they reached an agreement before the Christmas holiday, putting an end to the budget deadlock. Michael Kellner, Parliamentary State Secretary at the Federal Ministry for Economic Affairs, confirmed on December 13th local time that subsidies for the construction of TSMC’s and Intel’s fabs remain unchanged.

TSMC is planning to establish its first European production base in Dresden, the capital of the German state Saxony, with an investment exceeding EUR 10 billion. The German government has committed to a EUR 5 billion subsidy. Meanwhile, Intel aims to invest EUR 30 billion in Magdeburg and is expected to receive a EUR 9.9 billion subsidy.

In an interview with DPA on December 13th, Kellner emphasized that these investments will ensure future economic strength, benefiting the entire country.

The federal government’s confirmation of providing subsidies for fab construction brought relief to local leaders. Martin Dulig, Economic Minister of Saxony, noted that as time dragged on, trust was at risk of diminishing. He expressed great satisfaction with the federal government’s decision today.

Dulig underscored that for Saxony and Europe, TSMC’s fab establishment can reduce dependence on Asia and the United States, benefiting the local industry chain and small and medium-sized enterprises. This holds significant strategic importance.

“It is both good and important that the federal government has reached an agreement,” Bertram Kawlath, the vice president of the VDMA, an industry association of mechanical engineers in Germany, said in a statement. “The weeks of uncertainty are now over, clearing the way for important investments,” he said.

(Image: TSMC)