Taiwan Semi Set to Build $11B Chip Plant in Germany, Aiming for 2027 Production Start

Taiwan Semiconductor Manufacturing Co TSM announced it will begin constructing its first European semiconductor facility in Dresden, Germany, in the fourth quarter of 2024. 

At a conference in the Netherlands, TSMC’s European chief, Paul de Bot, confirmed that the $11 billion factory, European Semiconductor Manufacturing Co (ESMC), will start production in 2027. The stock is trading higher on Tuesday.

Significant stakeholders in the project include Infineon, NXP Semiconductors N.V.  NXPI, and Robert Bosch, each holding a 10% share. Kevin Zhang, who manages TSMC’s international operations, expressed confidence in receiving subsidies under the European Chips Act, citing strong support from the European Union and the German government, Reuters reports. 

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The Dresden facility will initially focus on 22-nanometre node chips, primarily for automotive microcontroller units, with potential future expansions to produce more advanced semiconductor technologies. 

Zhang also highlighted TSMC’s ongoing expansion in Japan, referencing the construction of a second, more advanced plant following the start of their initial factory in 2021.

TSMC’s April sales increased 60% to $7.3 billion, driven by the artificial intelligence frenzy and signs of recovery in consumer electronics.

The key Nvidia Corp NVDA supplier is projected to boost sales by about a third this quarter, following a 34.3% revenue increase in March.

TSMC stock gained over 75% in the last 12 months. Investors can gain exposure to the stock via VanEck Semiconductor ETF SMH

 and IShares Semiconductor ETF SOXX.

Price Action: TSM shares were trading higher by 2.73% at $150.40 at the last check Tuesday.

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