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TSMC Teams Up with NXP, Bosch, and Infineon to Build $11 Billion Chip Plant in Germany

TSMC, the world’s largest contract chipmaker, is in talks with partners and the German government to invest up to 10 billion euros ($11 billion) to build a wafer fabrication plant in Germany, according to Bloomberg News. The venture would involve TSMC, NXP Semiconductors, Bosch, and Infineon Technologies, and would focus on producing 28-nanometer chips for automotive and industrial applications.

TSMC has been eyeing a major expansion in Europe for a long time, as part of its strategy to diversify its global supply chain and meet the growing demand for semiconductors. In July 2021, TSMC chairman Mark Liu said TSMC was in discussions with customers over setting up a wafer fab in Germany. In March 2023, Reuters reported that TSMC was in advanced talks with Saxony, the region where the plant would be built, with emphasis on government subsidies to support the investment.

The proposed fab in Germany would be a departure from TSMC’s previous policy of concentrating most of its production on a few sites in Taiwan, where it has access to cutting-edge technology and skilled talent. TSMC has built fabs in the US and China in the past, but they are mainly for serving specific markets or customers. The German fab would be TSMC’s first facility in Europe, and would likely face competition from other chipmakers such as Intel, Infineon, and GlobalFoundries, who are also ramping up their presence in the continent.

The project is expected to have a budget of at least 7 billion euros, including state subsidies, but could rise to 10 billion euros as costs increase. The consortium expects Germany to contribute a significant portion of that amount, as the country seeks to boost its semiconductor industry and reduce its dependence on foreign suppliers. The fab would also create thousands of jobs and spur innovation in the region.

The exact location, capacity, and timeline of the fab are still unclear, but some sources suggest that it would be located in Saxony, near Dresden, where Infineon and GlobalFoundries already have fabs. The fab would produce chips based on 28-nanometer process technology, which is considered mature and widely used for automotive and industrial applications. However, this would be a step down from TSMC’s leading-edge chips that are based on 3-nanometer and 4-nanometer processes, which are currently produced only in Taiwan.

TSMC has not confirmed or denied the reports of its plans to build a fab in Germany. The company said it is always evaluating new opportunities to serve its customers better, but declined to comment on specific details. TSMC’s partners also declined to comment or expressed their support for any steps that would help grow the semiconductor ecosystem in Europe.

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