Christian Koitzsch, former plant manager of Bosch’s semiconductor facility in Dresden, has transitioned to a new role as the president of TSMC’s European Semiconductor Manufacturing Company (ESMC).

Frank Bösenberg, the Managing Director of the Semiconductor Association “Silicon Saxony” in Dresden, confirmed on the professional networking platform LinkedIn that Christian Koitzsch, the former plant manager of Bosch Semiconductor Manufacturing Company in Dresden, has embarked on a new journey in the new year, assuming the role of president at the ESMC, a subsidiary of TSMC.

In Christian Koitzsch’s LinkedIn profile, he also has indicated that his current position is the President of the ESMC. He is expected to oversee the construction of TSMC’s new plant in Dresden, with groundbreaking anticipated in the latter half of this year.

Dr. Koitzsch holds a PhD in physics and has previously held various managerial positions at Bosch, a major automotive components manufacturer. In July 2021, he assumed the role of plant manager at Bosch’s semiconductor fab in Dresden before transitioning to his current role as the President of the ESMC.

Bosch’s 12-inch fab primarily produces chips for automotive applications and is renowned for its high level of automation, claiming to be the most advanced fab in Europe. The designated location for TSMC’s Dresden plant happens to be right next door.

In August of 2023, TSMC announced the establishment of a joint venture, the ESMC, in Dresden, Germany’s eastern region. TSMC holds a 70% stake, while European semiconductor companies such as Bosch, Infineon, and NXP each hold a 10% stake.

This is TSMC’s first manufacturing facility in Europe, scheduled to commence production by the end of 2027. The German government has approved a subsidy of EUR 5 billion, facilitating this investment project with a total amount exceeding EUR 10 billion (approximately USD 10.9 billion).

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• [News] Germany Resolves Budget Standoff, Maintains Subsidies for TSMC and Intel
• [Insights] In-Depth Analysis of TSMC, PSMC, and UMC’s Latest Overseas Expansion Strategies

(Photo credit: TSMC)

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)

Germany is currently caught in a budget dispute that led to the rejection of a planned multi-billion-euro official subsidy for semiconductor companies. Sources suggest that if the German government reduces the initially committed subsidy, TSMC might need to reopen discussions on its investment in a wafer fabs in Dresden, Germany. This would include revisiting agreements with German joint venture partners, with the worst-case scenario being the abandonment of the investment initiative.

According to Financial Times, an individual familiar with discussions between TSMC and the German government said, “Worst case is that if it turns out nine months from now that there will be no subsidies, we will have to cancel the project.”

Initially, the German government had pledged substantial support for foreign chipmakers investing in the country. Recently, the German cartel office officially approved Bosch, NXP, and Infineon’s involvement in TSMC’s German company, ESMC. Each of these companies will secure a 10% stake, while TSMC will maintain substantive control with over 50% ownership. The investment of EUR 10 billion to establish a wafer fab in Dresden has received a government commitment of EUR 5 billion in subsidies.

On the other hand, Intel, the semiconductor giant, had also planned a significant investment of EUR 30 billion for constructing two new fabs in Magdeburg, Eastern Germany, with a subsidy of EUR 9.9 billion. It is also the largest foreign investment since World War II.

However, the German Federal Constitutional Court’s recent ruling declared the shift of the initially allocated EUR 60 billion credit limit, intended for the new COVID-19 pandemic, to the “Climate Transformation Fund” as unconstitutional. The subsidies for chipmakers, including Intel and TSMC, from the German government were supposed to originate from this fund, raising industry-wide concerns due to the court’s decision.

German political and business figures, along with industry experts, express apprehension that semiconductors might become collateral damage in the budget dispute, potentially tarnishing Germany’s standing.

The current ESMC plan is still under observation for potential changes.  According to TrendForce’s previous research that ESMC’s initial total planned production capacity is approximately 40Kwspm. The fab is set to focus on 28/22nm and 16/12nm processes, with groundbreaking expected in the latter half of 2024 and full-scale production in 2027. Forecast from TrendForce suggest that TSMC’s overseas capacity share will rise from 9% in 2023 to 15% by 2027.

(Image: TSMC)

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• [News] TSMC’s Fab in Germany Progress Reports Potential Setback in Manager Selection?

As TSMC speed up its global expansion, the developments in its overseas fabs and the appointments of key leaders are under intense scrutiny. According to reports from DeepTech’s Voice, TSMC is said to choose Ray Chuang as the General Manager/CEO for its Fab in Germany. Chuang is considered a rising star promoted from the 18A fab manager to Vice President of Fab Operations I in this year.

Ray Chuang, a TSMC veteran since 1997, originally served as the senior manager of the 18A fab, showcasing expertise in various process technologies. Notably, he successfully led teams in the mass production of N5 and N4 process. He was elevated to Vice President of the Fab Operations I in May, 2023.

The unveiling of fab managers for TSMC’s overseas sites is progressing. In addition to the already disclosed appointments of Rick Cassidy and Dr. Y.L. Wang as Chairman and CEO of the Arizona fab, respectively, the Japanese fab (JASM) will see Vice President Y.H. Liaw, responsible for mature process production, taking the helm as CEO, according to the press release from Taiwan OCAC.

Potential Impacts May Postpone TSMC’s Fab in Germany Progress

TSMC’s plan includes the establishment of a subsidiary, European Semiconductor Manufacturing Company (ESMC) GmbH, set to build a fab in Dresden, eastern Germany. The total investment stands at EUR 10 billion, with an expected subsidy of about EUR 5 billion from the German government. Noteworthy partners in this venture, including Infineon, NXP, and Bosch, will each hold a 10% stake, while TSMC retains substantial control with over 50% ownership. The fab’s primary focus will be on producing automotive chips using 28nm/22nm processes, with an estimated capacity of 30,000 to 50,000 wafers.

The fab in Germany was initially expected to receive an EUR 5 billion subsidy, with production scheduled for 2027. However, a report from Reuters on November 23rd highlighted a ruling by the Germany’s Constitutional court that the German government’s re-location of EUR 60 billion from the pandemic fund to the climate transition fund was unconstitutional. Consequently, the German Ministry of Finance issued an emergency notice, freezing spending plans across various federal budgets. This unexpected move may impact the subsidies initially earmarked for TSMC fab in Germany.

Insights from TrendForce indicate that ESMC’s total planned production capacity is approximately 40Kwspm. The fab is set to focus on 28/22nm and 16/12nm processes, with groundbreaking expected in the latter half of 2024 and full-scale production in 2027. Forecast from TrendForce suggest that TSMC’s overseas capacity share (includes China), will rise from 9% in 2023 to 15% by 2027.
(Image: TSMC)

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• [News] Rumored to Build Third Plant in Kumamoto, TSMC: Currently Focusing on Assessing the Construction of a Second Plant
• [Insights] In-Depth Analysis of TSMC, PSMC, and UMC’s Latest Overseas Expansion Strategies

Leading semiconductor companies TSMC, Robert Bosch GmbH, Infineon, and NXP Semiconductors have jointly to invest in the European Semiconductor Manufacturing Company (ESMC) GmbH, situated in Dresden, Germany. This strategic move aims to bolster the region’s semiconductor manufacturing capabilities, particularly catering to the burgeoning automotive and industrial sectors. The establishment of ESMC marks a significant stride towards the realization of a 300mm fabrication facility, pending the final decision on public funding, as part of the European Chips Act framework.

The planned fab is expected to have a monthly production capacity of 40,000 300mm (12-inch) wafers on TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technology, further strengthening Europe’s semiconductor manufacturing ecosystem with advanced FinFET transistor technology and creating about 2,000 direct high-tech professional jobs. ESMC aims to begin construction of the fab in the second half of 2024 with production targeted to begin by the end of 2027.

The prospective joint venture will see TSMC holding a substantial 70% ownership stake, while Bosch, Infineon, and NXP will each possess a 10% equity share, contingent upon regulatory approvals and meeting specific conditions. Total investments exceeding 10 billion euros are anticipated. Operational oversight of the fabrication facility will reside under TSMC’s purview.

However, industry analysts at TrendForce have highlighted potential challenges that lie ahead for TSMC’s groundbreaking endeavor. One such challenge pertains to the looming labor shortage issue in TSMC’s US fabrication facility, which is projected to reverberate globally. Moreover, navigating the intricacies of implementing subsidy policies in accordance with the European chip legislation and anticipated administrative procedures is expected to introduce a layer of complexity to the venture.

(Photo credit: TSMC)