TSMC plans to build a German chip fab

TSMC, the world's largest contract chipmaker and Asia's most valuable listed company, flagged in 2021 that it was in the early stages of reviewing a potential expansion into EU member Germany, in what would be its first European plant.

Bloomberg says that the German government and partners of the major Taiwanese foundry are in discussions about the purchase. The expenses, which were initially budgeted at €7 billion, are anticipated to rise to €10 billion, and the consortium anticipates Germany would foot a sizeable portion of the price. TSMC is planing to build a fab in Saxony, Germany, which will mainly produce 28nm automotive semiconductors.

 

It is reported that for several months, TSMC has also been negotiating with German authorities and local companies on whether to build a fab that can go down to the 16nm/12nm manufacturing process node, but currently limits the project to 28nm, which not only makes Europe It is more affordable and can also solve the supply problem of European car chips to some extent.

 

But for TSMC, the investment case is also embarrassing. Some insiders in the semiconductor industry pointed out that the main reason is that 28nm is not the main product of TSMC, which will be dragged down in terms of production capacity deployment, net profit and gross profit in financial reports, and the solution to reduce these problems is to get as much as possible. Government subsidies, but so far it is still stuck.

 

According to TSMC's financial report for the first quarter of 2023, TSMC's main products are 7nm and 5nm. These processes correspond to smartphones and high-performance computing (HPC), not 28nm automotive chips. TSMC said that due to the impact of the global economy, shipments have declined, and the operating margin may decline from 56.3% to between 52% and 54%.