Amsterdam The chip order manufacturer TSMC is about to settle in Dresden. “The aim is to get closer to our customers,” CEO Kevin Zhang told journalists in Amsterdam this Tuesday. The Taiwanese chip group is just about to calculate the billion-euro investment. The project is making “good progress”, according to the top manager.
Zhang praised the support TSMC is receiving from local authorities in Saxony and the EU. Without billions in subsidies, the technology leader in the semiconductor industry would probably not have thought about settling down on the Elbe. “The cost in Europe is very high,” Zhang said. “That is a challenge.”
Never before has a top manager of the world’s largest contract manufacturer in the chip industry spoken so positively about a possible new plant in Europe. So far, the Taiwanese have been much more reserved.
Now the federal government and the Free State of Saxony have apparently convinced the Taiwanese. In addition, with Bosch, Infineon and NXP, three major partners are said to be ready to finance the factory, which costs around seven billion euros, together with TSMC. The companies have not yet commented on this.
Apparently, the potential chip buyers in Europe with purchase promises have also contributed to the change of heart at TSMC. “Of course, everyone wants the lowest price, but at the same time, customers also want a resilient supply chain,” Zhang said.
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Because TSMC is irreplaceable for the European chip manufacturers and thus for the domestic industry. “TSMC is an important part of our strategy,” emphasized Jean-Marc Chery, head of STMicroelectronics, Europe’s largest semiconductor producer. The French-Italian company has been manufacturing at TSMC for 16 years, but so far almost exclusively in their home country of Taiwan. In view of the tensions between the island republic and the People’s Republic of China, customers increasingly see this as a risk.
Warren Buffett worries about TSMC
And not only the customers are alarmed, but also prominent voices like star investor Warren Buffett. “In the chip industry, nobody plays in their league,” the US billionaire recently praised the company. TSMC is one of the most important companies in the world and is excellently managed.
Nevertheless, the 92-year-old has sold his shares in TSMC over the past few months. Above all, Buffett fears that the chipmaker will suffer from the dispute between the People’s Republic of China on the one hand and Taiwan and the United States on the other. The government in Beijing sees Taiwan as a breakaway province. Buffett therefore announced that he would rather invest his money in Japan than in Taiwan.
TSMC has already decided to build new factories in Japan and the United States. The Taiwanese collect lavish state aid for this. TSMC is spending $36 billion on additional capacities this year, more than any other chip manufacturer. He firmly believes that the chip industry will grow enormously in the long term, CEO CC Wei justified these huge investments at a customer event in Amsterdam on Tuesday.
TSMC is increasingly becoming a risk
Gartner analyst Alan Priestley believes that if TSMC starts construction in Saxony soon, it will push the company to its limits. Because in order to ramp up series production, TSMC would actually have to bring in experienced personnel from Taiwan. In view of the expansion in their own country, in the USA and Japan, this is difficult. “And in Europe there aren’t enough process engineers,” warns the expert.
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Priestley fears that even with a new TSMC factory in Europe, Taiwan will remain a bottleneck in global chip supply. Because there are numerous factories in the country in which chips of mature technology generations would be produced. TSMC does not build such works elsewhere because it does not pay off.
Even Intel subsidiary Mobileye produces at TSMC
Many managers and politicians consider TSMC to be one of the most important companies in the world at the moment. The group manufactures over 12,000 different products using almost 300 different processes and supplies several hundred customers. Almost all major semiconductor manufacturers have their products manufactured by TSMC, from Apple to Infineon to Qualcomm.
Even the US rival Intel falls back on the factories of the Asians, because TSMC technologically left the chip pioneer from Silicon Valley behind. TSMC boss Wei brought Amnon Shashua, the founder and CEO of the Intel subsidiary Mobileye, onto the stage in Amsterdam. The specialist for automated driving from Israel does not have its semiconductors manufactured by the parent company Intel, but by TSMC.
The TSMC boss expects long-lasting growth in the chip industry and therefore also wants to invest in Germany.
(Photo: Reuters)
In principle, TSMC does not sell chips under its own name in order not to compete with business customers. Leaving aside memory chips, almost one in three semiconductors worldwide comes from a TSMC factory.
Morningstar analysts believe TSMC has excellent growth opportunities. Artificial intelligence in particular offers upside potential. Because these systems would become more and more popular. At the same time, researchers pushed AI aimed at developing human thinking abilities. This requires even more computing power. Nvidia is one of TSMC’s major customers. Of all semiconductor manufacturers, the American chip group has probably benefited the most from the AI boom.
Autochips are still scarce
TSMC currently only achieves around seven percent of its sales with the automotive industry, which is particularly important in Europe. According to the company, this share is set to increase to 15 percent by 2030 – and the new plant in Dresden should make a significant contribution to this. “We are very confident in the auto chip business,” Zhang said. No wonder, because the Taiwanese still do not deliver all orders on time, according to the major auto chip suppliers.
However, no decision has yet been made as to whether the plant in Dresden will actually be built, said Board Member Zhang. At its meeting in August, the board could clear the way.
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