According to a report from UDN, TSMC held a groundbreaking ceremony yesterday for its Dresden, Germany plant, offering a significant boost to the EU’s efforts to stabilize its chip supply.

TSMC Chairman C.C. Wei led a team of top executives at the event, joined by key officials including German Chancellor Olaf Scholz. European Commission President Ursula von der Leyen also attended, bringing with her the announcement that the EU has approved a EUR 5 billion subsidy for the Dresden plant.

TSMC announced last August that it would partner with Bosch, Infineon, and NXP Semiconductors to establish the European Semiconductor Manufacturing Company (ESMC) in Germany.

The joint venture will construct a 12-inch wafer plant, with TSMC holding a 70% stake, while Bosch, Infineon, and NXP each hold 10%. Construction is planned to start in the second half of this year, with mass production expected by the end of 2027.

The planned fab is expected to have a monthly production capacity of 40,000 12-inch wafers on TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technology.  TSMC will be responsible for the plant’s operations.

Following the U.S.-China tech war, the EU passed the “Chips Act” to fully support the development of the semiconductor industry, attracting key investments from companies such as TSMC, Intel, Belgium’s IMEC, GlobalFoundries, and GlobalWafers, all of which sought subsidies for their new European operations.

TSMC’s joint venture proposal, exceeding EUR 10 billion, stands as the largest global direct investment in Saxony’s history.

When C.C. Wei took the stage, he began by thanking the German government. He revealed that when he first met with the German Chancellor, he had prepared a polite speech to decline the offer of building a plant in Germany.

However, when the Chancellor mentioned that a budget had already been reserved for TSMC, Wei eventually found himself agreeing to the project.

C.C. Wei further highlighted that TSMC’s total investment in the German plant exceeds EUR 10 billion and is expected to create around 2,000 jobs.

He explained that the decision to locate the plant in Dresden was due to its proximity to TSMC’s customers and access to a large pool of talented individuals. Wei also pledged to continue recruiting and nurturing talent in the region, with the goal of making ESMC the most important semiconductor manufacturing hub in Europe.

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(Photo credit: TSMC)

TSMC announced last year that it would build a plant in Dresden, Germany. The plant is originally expected to break ground as early as Q4 this year, but now it may start sooner. According to a report from Deutsche Welle, TSMC’s Dresden plant will begin construction within a few weeks, which means it will start this fall, aligning with the company’s previously announced timeline.

The TSMC Germany plant was initially scheduled to begin construction in the second half of 2024 and to start production by late 2027. The new plant is expected to create approximately 2,000 direct high-tech jobs. TSMC will hold a 70% stake in the plant, with Bosch, Infineon, and NXP each holding 10% stakes, and TSMC will operate the facility. The EU and the German government are subsidizing about half of the plant’s investment.

To ensure the plant can commence production smoothly in 2027, the city of Dresden is investing EUR 250 million to build an industrial water supply system and enhance the reliability of the local power grid.

The TSMC Germany plant is expected to use 28/22nm planar CMOS and 16/12nm FinFET process technologies, with a monthly production capacity of approximately 40,000 300mm (12-inch) wafers.

On the other hand, another global semiconductor giant, Intel, was said to have delayed its construction of Fab 29.1 and 29.2 in Magdeburg, Germany, as the new timeline pushed the start of construction to May 2025, according to a report by Tom’s Hardware, citing German media outlet Volksstimme.

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(Photo credit: TSMC)

According to a report from Economic Daily News, amid U.S. presidential candidate Donald Trump’s remarks claiming that Taiwan is taking away chip business and should pay the U.S. for defense, geopolitical risks have become another focal point at TSMC’s July 18 earnings call.

TSMC stated that whether the tariffs may increase is a hypothetical issue; if new tariff issues do arise, TSMC will discuss with customers and share the corresponding costs. However, it is still too early to discuss this in detail. Thus, TSMC Chairman C.C. Wei emphasized that TSMC’s overseas expansion strategy remains unchanged, including ongoing fab construction in Arizona, USA, and Kumamoto, Japan, with plans for future facilities in Europe as well.

Sources cited by the report indicate that TSMC’s statement of sharing corresponding costs with customers may imply that if additional tariffs are imposed, TSMC will seek customer assistance in bearing these costs, effectively raising prices.

TSMC pointed out that in a fragmented globalization environment, the costs for everyone—including TSMC, customers, competitors, and the entire semiconductor industry—will be higher.

TSMC plans to manage and minimize cost disparities through three methods: implementing strategic pricing to reflect the value of regional flexibility; closely cooperating with local administrations to ensure their support; and leveraging fundamental advantages such as leading manufacturing technologies and large-scale production capabilities that competitors cannot match.

Regarding TSMC’s progress on overseas expansion, the Arizona plant in the USA is scheduled to begin mass production of the 4nm process in the first half of 2025 as planned. The second plant in Arizona, following recent announcements, will offer both 3nm and 2nm processes and is expected to start mass production in 2028. The third plant in Arizona is expected to provide 2nm or more advanced process technologies.

Regarding the Kumamoto plant in Japan, the target is to commence mass production in the fourth quarter of this year. Previously, TSMC and its joint venture partners announced plans to establish a second wafer plant in Japan specializing in 40nm, 12/16nm, and 6/7nm process technologies. This plant aims to support strategic customers in consumer, automotive, industrial, and high-performance computing (HPC) applications. Construction of the second wafer plant in Japan is planned to start in the second half of 2024, with production expected to begin by the end of 2027.

As for its European plant, TSMC plans to begin construction on the Dresden, Germany, facility in the fourth quarter of 2024. TSMC emphasizes that its overseas expansion depends on customer demand and government support, aiming to maximize shareholder value and ensure that its long-term gross margin target remains above 53%.

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(Photo credit: TSMC)

In the past two years, the semiconductor industry has experienced a market downturn, a recovery slower than expected, and a cash crunch. Major companies such as Intel, TSMC, and Samsung, while continuing to advance their expansion projects, have been constantly adjusting and slowing down the pace and schedule of their fab construction to better serve their long-term development goals. It’s found that seven fabs worldwide are projected to delay construction.

• Intel’s 1nm Chip Plant in Germany and Ohio Plant in the US Delay Construction

According to a report from global media outlet Volksstimme, the construction of Intel’s Fab 29.1 and Fab 29.2 near Magdeburg, Germany, has been postponed due to pending approval of EU subsidies and the need to remove and reuse black soil. The date of commencement has been pushed from summer 2024 to May 2025.

Earlier reports indicated that the construction of this chip planr was initially expected to begin in 1H23, but due to subsidy delays, construction was put off to summer 2024. Moreover, the topsoil at the construction site cannot be cleared until May 2025 at the earliest.

It is reported that Intel’s Fab 29.1 and Fab 29.2 were originally scheduled to start operations by late 2027 and were expected to employ advanced manufacturing processes, potentially Intel 14A (1.4nm) and Intel 10A (1nm) process nodes. However, Intel now estimates that it will take four to five years to build these two plants, and production is expected to commence between 2029 and 2030.

• Samsung’s Chip Plant in Pyeongtaek, South Korea and Fab in Taylor, US Delay Construction

In February 2024, Samsung revealed that it had partially halted the construction of its fifth semiconductor plant in Pyeongtaek, Gyeonggi Province. Samsung originally planned to build six semiconductor plants on an 855,000 square meter site in Pyeongtaek, creating the world’s largest semiconductor hub. Currently, the P1, P2, and P3 plants at the Pyeongtaek park house the most advanced DRAM, NAND flash memory, and foundry production lines, while the P4 and P5 plants are under construction.

Samsung stated that the halt was for further inspection. However, industry sources have revealed that Samsung’s adjustment of the new production lines for P4 and P5 fabs is to prioritize the construction of the PH2 production line at P4 fab. It is reported that P4 plant might build PH3 production line to produce high-end DRAM to meet market demands.

Besides, South Korean media Businesskorea also revealed Samsung has postponed the mass production timeline of the fab in Taylor, Texas, US from late 2024 to 2026, which is possibly due to a slowdown in the wafer foundry market growth, and the delay was attributed to U.S. government subsidies and issues related to the complexities in gaining permits.

• TSMC Postponed the Production of Two Plants in Arizona, US

On April 9, TSMC announced the plan to build a third fab in Arizona. Once completed, this fab will use 2nm process or even more advanced technologies to manufacture wafers for customers. With this addition, TSMC’s total capital expenditure in Phoenix, Arizona, will exceed USD 65 billion.

Meanwhile, TSMC disclosed that their first fab in Arizona will start production in 1H25, using 4nm process. The second fab, initially announced to use 3nm process, will also incorporate the more advanced 2nm process, with mass production set to begin in 2028. This fab was announced in December 2020, which was originally scheduled to start mass production using 3nm process in 2026, primarily, but the latest schedule represents a delay of nearly two years from the original one.

As to the third fab planned to set up in Arizona, TSMC has not yet disclosed the date for construction. However, they mentioned that it will use 2nm process or more advanced ones, with production expected to commence in the late 2030s.

• Wolfspeed’s 8-Inch SiC Fab might Delay Construction to 2025

Wolfspeed’s 8-inch SiC fab in Ensdorf, Saarland planned to invest about EUR 2.75 billion, but the construction has been postponed. The project has already secured subsidies of EUR 360 million from the German federal government and EUR155 million from the Saarland government. In addition, Wolfspeed is also seeking financial assistance from the European Chips Act. ZF will provide Wolfspeed with several hundred million dollars of financial investment in exchange for a minority stake in the plant.

Industry sources indicate that Wolfspeed aims to secure more funding before the groundbreaking ceremony. If it fails to gain financial assistance from the European Chips Act, the project is very likely to be delayed. The plant was initially scheduled to start construction in summer 2024, but Wolfspeed CEO Gregg Lowe revealed that it might now begin in 2025.

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(Photo credit: TSMC)

Paul de Bot, President of TSMC Europe, confirmed during a seminar in the Netherlands on May 14th that TSMC will start construction of its first chip plant in Europe in Dresden, eastern Germany. The project is scheduled to commence in the fourth quarter of this year, with production expected to begin in 2027.

Last August, TSMC announced the joint venture factory project in Germany, with a total investment of USD 11 billion. Apart from TSMC, Infineon, NXP, and Bosch each holds a 10% stake.

According to a report from Reuters, Kevin Zhang, Senior Vice President of Business Development and Overseas Operations Office at TSMC, stated that the project has received strong support from the European Union and the German government, thus TSMC is confident in obtaining subsidies under the European Chips Act.

Kevin Zhang stated that the semiconductor ecosystem in Europe is currently exciting, indicating that setting up a foundry in Germany would allow TSMC to directly access its major automotive customers.

It is understood that TSMC’s fab in Germany will initially focus on the 22-nanometer process, mainly producing automotive microcontrollers. There is a possibility of expanding to produce more advanced chips in the future.

In addition, Intel, another semiconductor giant, had also planned a significant investment of EUR 30 billion for constructing two new fabs in Magdeburg, Eastern Germany.

TSMC’s global expansion has reached locations in China, the United States, Japan, and Germany, solidifying its goal of being a “long-term and trustworthy provider of technology and capacity.”

TSMC’s Kumamoto Plant in Japan held its opening ceremony in February, with mass production expected to begin in the fourth quarter. Kevin Zhang also emphasized that TSMC will continue to expand its operations in Japan.

In response to growing customer demand, TSMC announced in February plans to begin construction of its Kumamoto Fab 2 by the end of the year, which will be its second, more advanced fab in Japan, scheduled to start operations by the end of 2027.

In contrast, the construction progress of its Arizona plant in the United States has been relatively slow. Due to the delay in the first phase’s production timeline from the end of 2024 to the first half of 2025, the production schedule for the second phase will also be postponed to start after 2027.

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