Dresden officially welcomed the construction of a new wafer fab by TSMC with a groundbreaking ceremony on August 20.
The ceremony was attended by high-profile leaders such as European Commission (EC) president Ursula von der Leyen, German chancellor Olaf Scholz, Saxony minister president Michael Kretschmer, and lord mayor of Dresden Dirk Hilbert. This underscores the importance of this investment, one of the largest single investments in the region's history.
The key investment project under the EU Chips Act
The fab will be built by the European Semiconductor Manufacturing Company (ESMC), a joint venture between TSMC, Bosch, Infineon, and NXP. Backed by German government subsidies, it's a crucial investment under the European Chips Act, representing a significant milestone in the EU's efforts to enhance its chip manufacturing autonomy.
TSMC's vital role in driving global economic growth and ensuring geopolitical stability has been further recognized through its new wafer fabs in the US, Japan, and the EU, with top leaders of the respective regions (US President Joe Biden, EC President von der Leyen, and Japanese Prime Minister Fumio Kishida) all present for the groundbreaking ceremonies or site visits.
Germany welcomes employment and ecosystem growth
ESMC's Dresden plant is expected to start production in 2027. For Germany, the hope is that this project can strengthen its domestic semiconductor manufacturing capabilities and create thousands of job opportunities.
Frank Bösenberg, the managing director of Silicon Saxony, noted that the construction of the TSMC plant alone will create 6,000 new jobs in the coming years. "For every job at the chip manufacturer, there are three jobs for suppliers and service providers," he said. By 2030, the region's microelectronics and software industries are expected to generate around 100,000 jobs.
The choice of location is also no coincidence. Today, 33% to 50% of Europe's semiconductor supply comes from Saxony. The numerous research institutions and suppliers in Dresden have established a globally scaled chip ecosystem. This has been facilitated by decades of semiconductor production experience in Dresden, where the first semiconductor factory was established in 1961 during the East Germany period.
For Europeans, providing a certain level of subsidies for plant construction is essential. German media analysis suggests that the current subsidies in Europe partially compensate for regional disadvantages. To keep pace with the development of chip manufacturing in Asia, long-term conditions need to be improved, or subsidies must directly offset Europe's corresponding disadvantages.
From the German perspective, TSMC's Dresden plant brings value by creating job opportunities within the wafer fab ecosystem. ESMC president Christian Koitzsch pointed out that the European Chips Act aims to strengthen the entire system.
ESMC job openings have already been posted in Germany, and Koitzsch stated that dual training programs are planned for 2025. Koitzsch has established a team of 20 people, half of whom are from Taiwan.
ESG a major advantage for TSMC
TSMC's self-sufficient and efficient water resource utilization methods in Taiwan are also seen as a major investment advantage, as Germans are environmentally conscious. Koitzsch expects the TSMC Dresden plant to benefit from these standards. The plant will also operate using green energy, similar to the practices at TSMC's plants in Arizona, USA, and Kumamoto, Japan.
Koitzsch stated that the entire microelectronics value chain needs to be strengthened. Europe must catch up, not only in manufacturing but also in the upstream stages of the value chain. This is not just a task for Germany but for Europe as a whole. Additionally, Czech Prime Minister Petr Fiala expects neighboring Poland and the Czech Republic to benefit from this, helping to integrate Czech companies into the supply chain.
