TSMC is set to significantly expand its manufacturing capabilities in Europe, to manufacture AI chips from Nvidia and AMD, among others. Meanwhile, the chip maker has already started building a new factory in Dresden, Germany.
The surging demand for AI chips is driving TSMC’s ambitious expansion plans in the European region over the coming years. While AI chips are a primary focus, the semiconductor giant’s production will not be limited to these components alone. In any case, the chip manufacturer is already adjusting the planning of its factories to accommodate this growth, says Taiwan’s Minister of Science and Technology, Wu Cheng-wen, in an interview with Bloomberg TV.
Construction of TSMC’s inaugural European facility has commenced in Dresden, Germany, as confirmed by Minister Wu. In the new plant, TSMC plans to produce mainly AI chips from chip developers such as Nvidia and AMD, although its production capabilities will extend beyond just AI-focused semiconductors.
This expansion could potentially benefit European chip designers as well. Companies such as Germany’s Infineon Technologies and Black Semiconductor, or Dutch firms like NXP Semiconductors and Alexera AI, may find new opportunities arising from TSMC’s increased presence in the region.
First European facility in Germany
The Dresden facility represents a €10 billion investment for TSMC, with the German government providing subsidies covering half of this amount as announced earlier this year. This plant marks TSMC’s first venture into European manufacturing, with production expected to commence in 2027.
These new facilities are part of TSMC’s broader strategy to diversify its production sites globally, partly in response to escalating tensions with China. The company is concurrently investing $65 billion in new production facilities in Arizona, USA.
Benefits beyond Germany
The impact of TSMC’s expansion is expected to extend beyond Germany’s borders. The Taiwanese minister emphasized that nearby regions can also benefit from the plant, such as suppliers who can locate close to the site.
Wu Cheng-wen specifically highlighted the potential advantages for the nearby Czech Republic. TSMC has expressed interest in financial contributions to the region and in establishing academic research programs. This approach may be part of a broader strategy to foster improved diplomatic relations between Taiwan and the Czech Republic.
Also read: TSMC reassures market analysts with impressive monthly numbers