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The Board of Directors at TSMC has made its choice: there’s going to be a new chip factory in Dresden, Germany. It should be operational by 2027. This would give the European chip industry a push in the right direction.

Previously, Intel decided to establish itself in Germany by having a factory built in Magdeburg. TSMC bakes most of its chips in its own Taiwan, but also has plans for factories in the United States (Phoenix, Arizona) and Japan (Kumamoto).

Cause for optimism, with a bit of nuance added in

Thus, the European Chips Act seems to be bearing fruit. However, some nuance must be added. The investments are substantial, but pale in comparison to what TSMC and Intel are planning in Arizona. In that US state, tens of billions of dollars are being plunked down with even more ambitious plans.

Tip: These are the plans for European chip production

By the way, TSMC is not the only investor in the new “fab”. Bosch, Infineon and Dutch company NXP are also in the mix, bringing the total investment to more than 10 billion euros. Still, TSMC will own 70 percent of this joint venture, with a 10 percent share for the other three partners.

Dresden as hotspot

Speaking to DW, managing director at Silicon Saxony Frank Bösenberg says the region around Dresden is very attractive for chip producers. “There is a large amount of knowledge available in the field and a rich history.” Such clustering has the advantage that talent from other companies does not have to undertake a major relocation right away. This makes recruitment a lot easier.

It does seem that chip manufacturing will not necessarily focus on the most complex processes. This is because in the automotive industry, for example, there is no need to be on the most expensive, smallest “nodes” for technology in vehicles. In Taiwan, TSMC currently produces 3 nanometer chips, all of which have been bought by Apple for the next year.

Also read: Apple has one-year monopoly on 3nm chips with iPhone 15