TSMC is said to be in wide ranging talks about the significant investment required to open a new chip fab in Saxony, Germany. Private investment may be as high as €10 billion (~$11 billion), according to "people familiar with the matter" talking to Bloomberg reporters. Public funds might end up matching that amount, to reel in this strategic investment, but the European Commission will have to greenlight any state aid. It is understood that TSMC's first fab in Europe will concentrate on 28nm production.
If the plans reported upon by Bloomberg are correct, TSMC will work in partnership with NXP Semiconductors, Robert Bosch, and Infineon Technologies to provide a wide base for the venture. The partnership will spread the €10 billion (~$11 billion) investment risk. TSMC partners' local business knowledge will help in both planning and the raising of state aid. Public funds won't quite meet the private investment level, at least initially. Bloomberg's report says that state subsidy levels will start at around the €7 billion mark ($7.75 billion), but could well rise to match the private investment capital.
If the EU Chips Act was designed to catch the biggest fish in semiconductors, TSMC and its partners' plans will be hard to resist. According to Bloomberg, it is typical for similar projects to gain 40% funding through EU subsidies, as the region strides to double its global semiconductor production share by 2030. Approval for these state subsidies will have to come from the European Commission, and negotiations over the size of subsidies will understandably be intense.
TSMC's 28nm Node
If the negotiations run smoothly, Bloomberg says that the Saxony chip fab project could be approved by TSMC by August. It won't be a leading edge facility, says the source, instead it will be tasked with churning out 28nm chips. A report shared by AnandTech last summer says that TSMC is "strongly encouraging its customers," still using its oldest nodes to migrate their mature designs to 28nm, which will become a new base level semiconductor component fab choice. While PC enthusiasts might turn their noses up at 28nm, the output will be welcomed by manufacturers who fared badly during the chip drought of the early 2020s.
In the wake of Bloomberg's report, the Taiwanese chip-making giant has confirmed to Reuters that it is still evaluating the possibility of building a fab in Europe. However, that doesn't really confirm nor deny anything of substance. Also remember, at this stage the plans could still change or fall through, even if the unnamed sources speaking to Bloomberg are highly credible.
Will Intel be a Neighbor?
We reported last month that Intel was still in negotiations with the German government over the scale of subsidies on offer. It was looking for a further $5 billion in subsidies, which will be used to establish a new chip fab near Magdeburg.
