Taiwanese semiconductor manufacturer, TSMC’s (2330. TW) board of directors, is expected to decide to build a factory in the German city of Dresden, the Handelsblatt Daily reported on Monday. The paper added that the company is negotiating government subsidies worth as much as 5 billion euros ($5.49 billion), citing government sources. The sources said the company will operate the factory, which will produce chips for automakers, in a joint venture with local partners Bosch Ltd, NXP Semiconductors NV, and Infineon Technologies AG.
The plant is the latest move by TSMC to expand its presence in Europe, where it has long faced competition from rival GlobalFundries GF. The company reopened a wafer fabrication plant, known as a “fab,” in Camas, Washington, last year after investing billions of dollars in a “Fab 21” project. The reopening came after President Donald Trump’s administration pushed American companies to reduce their reliance on China, where TSMC has plants.
TSMC, the world’s biggest contract chipmaker, is in talks with Berlin about how much it can expect in state aid for its new facility. TSMC is seeking subsidies from the federal and local governments for its project, people familiar with it said. They asked not to be identified because the deliberations were private. The top end of the subsidies being discussed would put them on par with what Japan is offering TSMC for its planned factory in Fukuoka and well above the 40% maximum that most other chipmakers receive for their European plants.
According to the Handelsblatt report, the company will also consider setting up a training center in Dresden and offer jobs to apprentices at German universities and vocational schools. The company has set up similar centers in the United States and other countries to promote high-tech education and train qualified workers for the industry.
The decision by the TSMC board could come as early as Tuesday. The company’s leadership had signaled in recent earnings calls that it was mulling the construction of a factory in Germany, and a decision should be made before August at the earliest, according to two people familiar with the matter.
TSMC will have to weigh several factors, including labor cost, the availability of skilled workers, and whether investing in an overseas plant makes sense when it can make more money in Asia. The firm may also have to consider labor rules, notably reporting requirements for worker deaths, hospitalizations, and amputations, which it must comply within Germany. TSMC has struggled to recruit enough skilled workers for its existing plants, and it delayed the opening of its new plant in Phoenix, Arizona, by a year because of shortages. The company also pushed back the launch of its new factory in Malta, New York, over concerns about the labor rules there.
