Taiwan Semiconductor Manufacturing Co. (TSMC) is in talks with partners to spend as much as 10 billion euros ($11 billion) to build a microchip fabrication plant in Saxony, Germany, according to people familiar with the matter.
The planned venture between TSMC, NXP Semiconductors, Robert Bosch and Infineon Technologies will include state subsidies and would have a budget of at least 7 billion euros, with the total investment likely closer to 10 billion euros, the people said, asking not to be identified because the information is private.
A final decision has not been made and the plans could still change, they said.
TSMC is still assessing the possibility of building a plant in Europe, spokeswoman Nina Kao said, without elaborating. Spokespeople for NXP, Bosch, Infineon and Germany's Economy Ministry declined to comment on the project.
TSMC Chairman Mark Liu told shareholders in 2021 that the chipmaker had started assessments on setting up manufacturing operations in Germany, Europe's largest economy.
The proposed European plant would focus on chips for the automotive sector, CEO C. C. Wei has said.
Similar projects in Germany have sought as much as 40 percent of their funding from subsidies as the European Union attempts to double its share of global semiconductor production by 2030.
In April, the EU passed the 43 billion euros Chips Act to boost domestic output after supply chain disruptions during the COVID-19 pandemic and as tensions between the U.S. and China escalate.
Any state aid would require approval from the European Commission, and the consortium is in talks with officials over the size of the package, the people said.
In Japan, where TSMC is spending $8.6 billion with partners to build a plant, it will receive about half of the funding from the government.
The German facility, which TSMC could approve as soon as in August, would focus on producing 28-nanometer chips, according to some of the people. If built, it would be the company’s first fab in the EU.
TSMC is Taiwan’s biggest company and Apple's main chipmaker. It makes the vast majority of its semiconductors in Taiwan but, as customers and governments grow increasingly concerned over geopolitical tensions and China’s military threats against the island, it has begun to build more capacity in the U.S. and Japan.
Infineon broke ground Tuesday on a semiconductor fab in Dresden, a city in Saxony that also hosts production facilities for GlobalFoundries and Bosch.
Chipmakers tend to build plants in clusters, allowing the expensive facilities to take advantage of infrastructure and workers that are already there.
The planned facility would be a major boost for the EU Chips Act, which has attracted commitments around the bloc from Intel, STMicroelectronics and GlobalFoundries. Intel, however, has delayed the start of a major project in Germany to request more aid.