TSMC Mulls Building a Fab in Germany

(Image credit: TSMC)

Chairman of Taiwan Semiconductor Manufacturing Co. (TSMC) said on Monday that the company had begun to consider building a fab in Germany, its first manufacturing facility in Europe. The decision will depend on demand and TSMC customer requirements, whereas the cost the facility will be shared between TSMC, its clients, and/or local or state governments.

"We are in the preliminary stage of reviewing whether to go to Germany," said Mark Liu, the chairman of TSMC, at the company's annual shareholders' meeting, reports Nikkei. "It is still very early, but we are seriously evaluating it, and [a decision] will depend on our customers' needs." 

Being the world's largest contract maker of semiconductors, TSMC has hundreds of customers, many of them in Europe. The global chip shortage as well as geopolitical tensions made many (if not all of them) consider their risks associated with production of chips exclusively in Taiwan. 

"We continue to communicate with our major clients in Germany to see whether this is most important and effective for our clients," said Liu, reports Reuters. "Clients are the backing of our global expansion. We will move very cautiously."  

Recently the company began to build its N5-capable (5 nm) fab in Arizona which will start volume production of chips in Q1 2024. The fab is funded by TSMC and has support from the U.S. federal government and the State of Arizona. The fab will have a production capacity of around 20,000 300-mm wafer starts per month, but if TSMC's customers in the U.S. need more, TSMC can build additional modules at the same site to boost output.  

Europe is not a major chip development hub. Very few designs that are developed in the EU require leading-edge process technologies that TSMC is known for, so building an N3 or N2-capable (3 nm or 2 nm) semiconductor production facility in Europe does not make a lot of sense (also this is something that European bureaucrats want). Nonetheless, there are enough European companies in automotive and telecommunication sectors that use TSMC's advanced and mature nodes. These companies could be interested in building chips closer to home.  

There is a catch though. While semiconductors themselves can be produced almost anywhere, TSMC's test and packaging facilities are in Taiwan. There are independent Outsourced Semiconductor Assembly and Test (OSAT) companies that offer similar services, but they also located in Taiwan, China, or other Asian countries. As a result, while chips can be made in Europe, they will have to be shipped to Asia for testing and assembly, then sent back to Europe where they will be used. At present, TSMC does not talk about building a packaging facility in Europe, but it looks like localization of the whole supply chain might be needed if TSMC's clients want to remove geopolitical risks. 

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.