May 25, 2023
TSMC in Talks for Up to Half German Plant’s Cost in Subsidies
(Bloomberg) -- Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker, is in talks to receive German government subsidies for as much as 50% of the costs to build its new semiconductor plant in the country, people familiar with the matter said.
The government is in ongoing negotiations with TSMC as well as its partners on the project — Bosch Ltd., NXP Semiconductors NV and Infineon Technologies AG — the people said, asking not to be identified because the deliberations are private. No final decisions have been made and the final subsidy amount could still change. Any state aid must also be signed off by the European Commission.
The deliberations over the Dresden plant, which could cost as much as €10 billion ($10.7 billion) to build, show how competition for semiconductor manufacturing capacity has intensified. The top end of the subsidies being discussed would put German government support for the fab on par with what Japan’s offering TSMC to build a factory there. It would also outpace the 40% maximum that most other chipmakers are getting for their plants in Europe.
Read More: TSMC Plans for First German Chip Fab With Cost Up to €10 Billion
The German Economy Ministry said in a statement that it’s in a “close exchange” with TSMC “with the aim of jointly discussing prerequisites for an investment decision.” The ministry didn’t comment on the subsidies beyond saying that the government could fund the project under the European Chips Act.
A spokeswoman for TSMC said that the company is evaluating the possibility of building a fab in Europe and declined to comment further. The chipmaker’s Chief Executive Officer C. C. Wei had said in April that the decision would be based on demand from customers and the level of government support.
The plant would be a big win for the EU’s €43 billion Chips Act, which is aimed at increasing domestic output to avoid future supply chain disruptions. STMicroelectronics NV, GlobalFoundries Inc., Infineon Technologies AG and Wolfspeed Inc. are among the chipmakers that have announced new investments in Europe since it was first proposed last year.
Read More: EU Advances €43 Billion Plan to Make More Semiconductors
“The goal is to be close to our customers,” TSMC’s Senior Vice President Kevin Zhang said at an industry event in Amsterdam this week. TSMC’s board will make a final decision about going ahead with the project as soon as August, he said. “If we do build a fab in Dresden, likely we would start at the 28 nanometer generation.” Such chips could be used for microcontrollers in cars and could be made smaller in future.
--With assistance from Debby Wu and Kamil Kowalcze.
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