Wu Cheng-wen, the chairman of Taiwan's National Science Council, said in an interview with Bloomberg that TSMC plans to build more fabs in Europe in addition to its facility near Dresden, Germany. While the Dresden fab built by ESMC, a joint venture between TSMC, Bosch, Infineon, and NXP, will focus primarily on chips for Germany's automotive industry, other fabs are said to focus on the AI sector, which implies on fairly advanced process technologies.
"They have started construction of the first fab in Dresden; they are already planning the next few fabs in the future for different market sectors as well," Wu Cheng-wen said in the interview with Bloomberg TV.
Wu did not provide details on the timing of TSMC's additional expansion plans in Europe, which pretty much means that at this point this expansion plans are essentially speculations. In an emailed response to Bloomberg, TSMC stated that it is concentrating on its ongoing global projects and currently has no new investment initiatives underway.
TSMC’s global expansion is part of a broader strategy to reduce reliance on production in Taiwan amid geopolitical tensions with China. The company is simultaneously building new facilities in the U.S. and Japan. TSMC's foreign investments are aimed, among other things, at safeguarding against potential disruptions in its own semiconductor supply chain. In addition, local fabs help TSMC to land orders from companies whose clients demand that their chips be made domestically (e.g., the U.S. government).
The ESMC fab, TSMC's first in the European Union, represents a significant investment of approximately €10 billion ($10.9 billion). Roughly half of the project's cost is covered by government subsidies. The plant is expected to start production by the end of 2027. When it comes online, the ESCM fab is projected to have capacity of 40,000 300mm wafer starts per month (WSPM) using TSMC's 12nm, 16nm, 22nm, and 28nm-class process technologies.
If TSMC is to build another fab in Europe with a focus on the AI sector, it might need to address the needs of such companies as AMD and Nvidia, which currently use sophisticated process technologies, such as TSMC's N5 and N4 (5nm and 4nm-class, respectively).
The TSMC fabs that can manufacture chips on these production nodes cost north of $20 billion and building them in Europe will either require TSMC to get huge government grants, or commitments from customers with significant demand for wafers, such as AMD, Broadcom, and Nvidia. While the AI sector is expanding quickly, it remains to be seen whether it can use all the advanced capacity currently being built in Taiwan and the U.S.
