BERLIN -- Robert Bosch said it will establish a joint venture with TSMC, Infineon and NXP with the aim of building a wafer fab in Dresden, Germany, by the second half of next year.
The joint venture will be 70 percent owned by TSMC, with Bosch, Infineon and NXP each holding a 10 percent equity stake, Bosch said.
Total investments are expected to exceed 10 billion euros ($10.97 billion) via equity injection, debt borrowing, and strong support from the European Union and German government.
The plant will mainly produce chips for the automotive industry, with output targeted to begin by the end of 2027.
It is expected to have a monthly production capacity of 40,000 300-mm (12-inch) wafers on TSMC's 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technology, Bosch said in a statement on Tuesday.
The new site is a boost to European efforts to reduce its reliance on Asia for importing vital components and comes after German carmakers including Volkswagen and Porsche highlighted their keen interest in having a TSMC plant in Europe's biggest economy.
Germany will contribute up to 5 billion euros to the factory in Dresden, German officials said.
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TSMC, the world's largest contract chipmaker, has been in talks with the German state of Saxony since 2021 about building a fabrication plant, or "fab" in Dresden.
TSMC is one of several chipmakers, including Intel and Wolfspeed, seeking to draw on government funding to build factories in Europe.
Brussels and EU member states are pushing for home-grown production by offering billions in state subsidies to cut dependency on Asian suppliers and ease a global chip shortage which created havoc for automakers.
EU negotiators this year agreed on a final version of a €43 billion plan to help Europe manufacture 20 percent of the world's semiconductors by 2030.
Germany has emerged as one of the most aggressive countries chasing after more domestic chip manufacturing.
Intel is set to receive about $11 billion in subsidies from the German government for its own chip complex in Magdeburg.
Bloomberg contributed to this report
