EU approves German state aid for US$11 billion TSMC joint-venture chip plant

Taiwan Semiconductor Manufacturing Co (TSMC) on Tuesday launched a major new chip plant in Dresden, Germany, expected to be a key supplier to European industry and carmakers after the EU Commission approved 5 billion euros (US$5.5 billion) worth of state aid.

The large aid award for the project, which will cost 10 billion euros in all, is the biggest approved so far under the EU Chips Act, and the first in Germany.

It is also the first project in Europe under TSMC, the world’s largest contract semiconductor maker, and is expected to improve Europe’s resiliency if a chip shortage of the type experienced during the Covid-19 pandemic happens again.

“This is a true win-win situation for all of us,” EU Commission President Ursula von der Leyen said at a ceremony in Dresden, the heart of Germany’s “Silicon Saxony” chip-making region.

German Chancellor Olaf Scholz said ensuring access to semiconductors is a “central issue” for Germany, while Economy Minister Robert Habeck said his government, which has struggled with budget problems, would do all it can to ensure the project enters production on time in 2027 as planned.