Starting signal for state-of-the-art chip factory “ESMC” in Dresden
German Federal Ministry for Economic Affairs and the world’s largest chip contract manufacturer TSMC announce start of funding
The German Federal Ministry for Economic Affairs, together with the Taiwan Semiconductor Manufacturing Company (TSMC) and its partners Bosch, Infineon, and NXP, officially announces the start of joint investments in the construction and operation of a state-of-the-art chip factory in Dresden. The German government will provide up to 5 billion euros in funding to support the planned investments of over 10 billion euros by the partners TSMC, Bosch, Infineon, and NXP in the joint venture “European Semiconductor Manufacturing Company” (ESMC). To this end, the Federal Ministry for Economic Affairs and the four companies have now signed a contractual agreement. The European Commission approved the planned federal funding under state aid legislation on August 20, 2024. On this basis, the Federal Ministry for Economic Affairs was able to finalize the intended funding as planned before the end of the year.
The Federal Ministry for Economic Affairs will provide funding for the project over the next years as part of the European Chips Act with payments depending on the progress of the project. The ESMC chip fab is the first German project to be nationally authorized and approved under state aid legislation by the European Commission under the European Chips Act. With a total investment of more than ten billion euros, the project is currently also the largest investment project of its kind in the European Union under the European Chips Act.
The ESMC chip factory will strategically strengthen the important domestic chip production and contribute to the resilience of the chip supply in Germany and Europe as well as in sectors that are central to Germany. Secure and reliable access to semiconductor chips is an important prerequisite for safeguarding the added value, innovative strength, and competitiveness of the German and European economies. In line with the European Union, the German government's goal is to strengthen the capabilities and capacities for the semiconductor key technology for the future.
With its investment in Dresden, TSMC, the world's leading contract manufacturer of semiconductor chips, is coming to Europe with a chip factory for the first time.
TSMC has experienced semiconductor companies from Germany and Europe at its side. The four companies have founded the European Semiconductor Manufacturing Company as a joint venture to implement the project.
The new chip factory in Dresden will manufacture technology nodes in the 12-28 nanometer range on 300 mm wafers, among other things for driver assistance systems and for the controls of infotainment systems in vehicles, for the industrial controls of machines, and for communication and network technologies. The planned production capacities will close a gap in the German and European chip industry and, when full capacity is reached, will amount to almost 500,000 wafers annually. Among future European customers, small and medium-sized companies as well as start-ups will be given preferential access to production capacities. ESMC will also prioritize efforts to fill orders from the EU and Germany during crises.
Up to 2,000 jobs are planned. This could indirectly create up to 11,000 additional jobs in the local area and in the nationwide semiconductor ecosystem. In addition, upstream industries such as material and chemical manufacturers, as well as logistics and service companies, will benefit from this development. The chip factory is already working with universities across federal states, strengthening Germany's technological expertise and opening up great opportunities for innovation. This is a decisive step towards accelerating digital transformation.
About the European Chips Act:
With the European Chips Act, the EU has created the legal basis for bringing more semiconductor production to Europe. Increasing production capacity in Europe is a key objective of the European Chips Act.
The European Commission’s goal is to expand Europe’s share of global semiconductor production to 20 percent by 2030. With its own capacities for the development and production of semiconductor technologies, dependencies are to be reduced, and security of supply and competitiveness strengthened. The German government shares these goals. The package of measures came into force in September 2023.
The press release was first published on the website of the German Federal Ministry for Economic Affairs.