The Scene
DRESDEN, Germany — Taiwanese semiconductor giant TSMC broke ground Tuesday on a massive new plant in Germany, its first in Europe and a marker of the continent’s newfound chip ambitions.
Leaders who symbolically shoveled dirt at the groundbreaking ceremony hailed the project as a tentpole in Germany and the rest of Europe’s efforts to catch up in the critical semiconductor sector. TSMC holds a 70% stake in the new factory — formally called European Semiconductor Manufacturing Company — along with established European partners who each have a 10% stake: Infineon, Bosch, and NXP.
Leaders presented the future plant as a sign of the continent’s legitimacy in the intensifying battle for semiconductor manufacturing.
“This is more than a groundbreaking ceremony,” European Commission President Ursula von der Leyen said. “It is an endorsement for Europe as a global innovation powerhouse.”
The $10-billion-euro plant — partly funded by 5 billion euros in subsidies from the German government that were unlocked through the European Chips Act — will focus on making chips that power Germany’s strong automotive industry. TSMC CEO C.C. Wei said the company chose to expand to Germany to be “close to our customers.”
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J.D.’s view
Europe has put billions in public funds over the last year toward the semiconductor industry through its Chips Act, and set a goal of doubling the EU’s share of the global microchips market, from 10% to 20%, by 2030.
A third of Europe’s semiconductors are now manufactured around Dresden, which has branded itself as “Silicon Saxony” and is home to major chipmakers like GlobalFoundries, Infineon, and X-FAB.
But there’s reason to be skeptical that the public investment is enough for Germany and Europe to catch up. Despite the rosy outlook presented Tuesday, some of Europe’s recent chip ventures have been rocky.
The construction of chip fabs in the German cities of Magdeburg and Saarland have been delayed, and Intel recently halted plans to build microchip plants in France and Italy.
Europe finds itself in competition with other governments that are also offering generous subsidies to companies to set up shop. The EU’s Chip Act set aside far less funding for semiconductors than other governments, like the US and South Korea.
“If you really want to catch up, more has to be done,” said Frank Bösenberg, the head of Silicon Saxony, a local microelectronics business group. Looking around at the groundbreaking, Bösenberg said: “Without any doubt, this will boost our region and we will grow. But the market also grows.
Much of the business sector also worries that the rise of the German far right — or at least the narrative that extremist, anti-immigrant parties are surging — could make the country less appealing to skilled foreign workers who are desperately needed in the microelectronics sector. Campaign signs around Dresden from the far-right Alternative für Deutschland party that proclaim “DEPORT, DEPORT, DEPORT” are sure to frustrate businesses trying to recruit talent from abroad.
Room for Disagreement
Local business leaders I talked to weren’t naïve about the challenges Germany faces in becoming a larger player in the chips space — especially the skilled workers issue — and are making recruitment and training a priority. TSMC is smartly looking to the local technical university, TU Dresden, for talent, partnering on an exchange program in which up to 100 students per year get hands-on training in Taiwan.
Also, the AfD party is unlikely to hold power at the state or federal level in the coming years, a relief to establishment, pro-business politicians who may be worried about the party’s impact on foreign recruitment.