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[News] TSMC Reportedly Possibly Reconsiders German Investment Amid Subsidy Uncertainty
Germany is currently caught in a budget dispute that led to the rejection of a planned multi-billion-euro official subsidy for semiconductor companies. Sources suggest that if the German government reduces the initially committed subsidy, TSMC might need to reopen discussions on its investment in a wafer fabs in Dresden, Germany. This would include revisiting agreements with German joint venture partners, with the worst-case scenario being the abandonment of the investment initiative.
According to Financial Times, an individual familiar with discussions between TSMC and the German government said, “Worst case is that if it turns out nine months from now that there will be no subsidies, we will have to cancel the project.”
Initially, the German government had pledged substantial support for foreign chipmakers investing in the country. Recently, the German cartel office officially approved Bosch, NXP, and Infineon’s involvement in TSMC’s German company, ESMC. Each of these companies will secure a 10% stake, while TSMC will maintain substantive control with over 50% ownership. The investment of EUR 10 billion to establish a wafer fab in Dresden has received a government commitment of EUR 5 billion in subsidies.
On the other hand, Intel, the semiconductor giant, had also planned a significant investment of EUR 30 billion for constructing two new fabs in Magdeburg, Eastern Germany, with a subsidy of EUR 9.9 billion. It is also the largest foreign investment since World War II.
However, the German Federal Constitutional Court’s recent ruling declared the shift of the initially allocated EUR 60 billion credit limit, intended for the new COVID-19 pandemic, to the “Climate Transformation Fund” as unconstitutional. The subsidies for chipmakers, including Intel and TSMC, from the German government were supposed to originate from this fund, raising industry-wide concerns due to the court’s decision.
German political and business figures, along with industry experts, express apprehension that semiconductors might become collateral damage in the budget dispute, potentially tarnishing Germany’s standing.
The current ESMC plan is still under observation for potential changes. According to TrendForce’s previous research that ESMC’s initial total planned production capacity is approximately 40Kwspm. The fab is set to focus on 28/22nm and 16/12nm processes, with groundbreaking expected in the latter half of 2024 and full-scale production in 2027. Forecast from TrendForce suggest that TSMC’s overseas capacity share will rise from 9% in 2023 to 15% by 2027.
Please note that this article cites information from Financial Times
(Image: TSMC)
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