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Following its investments in wafer fabs in the United States and Japan, chip manufacturing giant TSMC held a groundbreaking ceremony for its first European chip factory in the "Saxony Silicon Valley" in Dresden, eastern Germany on the 20th.

TSMC CEO Wei Zhejia presided over the ceremony, and German Chancellor Schulz and European Commission President von der Leyen attended the ceremony and delivered speeches. Among them, Schulz's remarks defending the high subsidies for the German semiconductor industry attracted a lot of media attention. According to the German "Stern" weekly report on the 20th, Schulz said that high subsidies can guarantee the chip demand and employment opportunities of German companies, and give an "extra boost" to the entire regional economy.

German Chancellor Scholz (right) and European Commission President von der Leyen (left) attended the groundbreaking ceremony for TSMC's first European chip factory. Source: Foreign media

According to reports, TSMC will hold a 70% stake in the new factory, and its partners, Germany's Bosch, Infineon and Dutch chipmaker NXP, will each hold a 10% stake. The new factory will be called the European Semiconductor Manufacturing Company (ESMC). The project is expected to invest more than 10 billion euros (about 79.1 billion yuan), of which 5 billion euros will be borne by the German federal government to promote the security of the EU semiconductor supply chain. The factory is scheduled to start production at the end of 2027 and is expected to create 2,000 jobs. In addition, the factory focuses on automotive chips, aiming to meet the EU's demand for localization of automotive and industrial chips.

Scholz said at the groundbreaking ceremony, "The growth of semiconductor production capacity is very important for Germany and Europe as a whole. If Germany wants to rely on semiconductors to achieve sustainable future technologies, then we cannot rely on semiconductor supplies from other parts of the world." He said that it was "good news" that TSMC and its European partners were investing in Germany with the necessary incentives, with the support of the EU chip subsidy program.

According to a report by Germany's "Zeit" on the 20th, von der Leyen emphasized at the groundbreaking ceremony that areas outside Dresden will also feel the benefits. The European economy will benefit from the new production.

"The groundbreaking ceremony of TSMC's Dresden plant marks the beginning of the race to catch up in the European semiconductor industry, but several other large projects in Germany have stalled." German Wirtschaftswoche reported on the 20th that TSMC's plant is the first of a series of chip investments in Europe to proceed as planned, while other semiconductor plant projects in Germany, such as those of US chip makers Intel and Wolfspeed, have stalled due to corporate funding and other issues. The head of TSMC's competitor GlobalFoundries Semiconductor said in an interview with German Handelsblatt last week that other chip manufacturers have not received any subsidies, which distorts the basis of competition.

German media reported that the original plan was that these investments would increase Europe's chip production capacity from the current 10% of the world to 20% by 2030. But looking ahead, we can find that although TSMC's investment prospects are broad, its success is difficult to guarantee. "Asia Digital Times" previously reported that TSMC's German factory will face three major obstacles to profitability, namely the powerful local labor unions, high production and operation costs, and limited professional workers.

According to Bloomberg, TSMC's first factory in Japan may start mass production by the end of this year. However, the construction of its factory in the United States, which has invested more than $65 billion, is progressing slowly. Labor shortages and cultural conflicts among employees have brought major challenges to the company's expansion.