TSMC And Pals Dream Of €10B German Chip Fab

A collaboration between TSMC, NXP Semiconductor, Bosch, and Infineon would see the construction of a new fab in Saxony, Germany valued at as much as $11 billion (€10 billion).

Citing people familiar with the matter, Bloomberg reports the Taiwanese foundry giant is in talks with partners and German government over the deal. Initially planned at €7 billion, the costs are expected to balloon to €10 billion and the consortium expects Germany to cough up a solid chunk of that.

TSMC has had its eye on a major manufacturing hub in Europe for years now. In 2021, Chairman Mark Liu said the chip shop was deciding on a facility in Germany and, as of March, is reportedly in advanced talks with local leaders about funding.

However, where such a facility will fit into TSMC's vast manufacturing empire remains to be seen. Production of chips for the automotive sector has previously been floated, but some sources told Bloomberg that the facility will focus on more mature 28-nanometer parts.

This would be a step down from the fabs TSMC is currently building in the American Southwest. Last we heard, those will produce silicon based on three and four nanometer process technology.

While TSMC has largely reserved its leading-edge chips for production in Taiwan – 3nm and 4nm may be cutting edge today, but they won't be when the Arizona fabs come online – execs have previously bemoaned an oversupply of 28nm capacity. Early last year, TSMC CEO C.C. Wei admitted that 28nm was problematic, even before the pandemic.

• Germany and Intel both want more from planned Magdeburg mega-fab
• Infineon given the green light for €5B Dresden chip fab
• GlobalFoundries, STMicro snag €7.4B in EU money for French fab project
• US chipmakers don't want to be locked out of industry's biggest market: China

The Register asked TSMC – as well as Infineon and Bosch – for comment, but had not heard back at the time of publication. We'll let you know if anything material arises.

NXP declined to comment on the reported collaboration, but told The Register that it "welcomes all sensible steps intended to help support the growth of the semiconductor ecosystem in Europe." NXP and TSMC have previously partnered on a semiconductor manufacturing project in Singapore.

TSMC wouldn't be the only foundry operator looking to set up shop in Germany.

Intel has committed to building a €20 billion "mega fab" in Magdeburg and has secured €6.8 billion in subsidies from the German government to do it. However, since announcing the project, Chipzilla has struggled to reach an agreement for additional funding, with German leaders reportedly telling the x86 giant that if it wants more cash it should increase its investments to match.

Meanwhile, Infineon in February received the green light for a €5 billion chip fab to produce automotive, industrial, and power applications in Dresden. And last summer Bosch said it would pour €3 billion into its domestic semiconductor sites in Dresden and Reutlingen.

Now that the European Chips Act has been finalized, we fully expect a flurry of new projects, as chipmakers vie for a slice of the €43 billion in subsidies and grants – if not in Germany elsewhere in Europe. ®