2024-08-21 20:12:29
On Tuesday, Germany took an important step towards Europe’s greater self-sufficiency in a key area of technology. Near the Czech border, in Dresden, the construction of a semiconductor factory has begun, which will be led by the Taiwanese company TSMC, known for the production of the most advanced chips in the world. The continent desperately needs them for the production of cars and in other industries.
Europe realized its unpreparedness and dependence on foreign suppliers during the coronavirus pandemic, when the production of chips was interrupted and their subsequent shortage occurred. These are found in mobile phones, computers, cars, medical and military equipment or even in common appliances such as refrigerators or washing machines.
When covid-19 was brought under control, a global race to produce chips began. The United States, South Korea and China started investing massively in factories.
Staron’s player in this field is Germany. Chips have been produced in Dresden since the 1980s, when Siemens and AMD joined the German electronics and high-tech headquarters. Bosch joined them three years ago and Infineon last year. This is also why Dresden is nicknamed “Silicon Saxony”, referring to the American innovation center Silicon Valley.
They are now joined by TSMC, a Taiwanese firm and world leader in semiconductor manufacturing. The first chip should come out of the new factory for ten billion euros (252 billion crowns) at the end of 2027. The plant will produce up to 480,000 pieces of various sizes annually. Therefore, they will be directed to industry and the production of cars, writes the Japanese daily Nikkei Asia.
Germany will contribute half of the amount for the construction, another 88 billion crowns will be paid by TSMC, reports Reuters. The ESMC (European Semiconductor Manufacturing Company) project will bring new jobs – around two thousand semiconductor production alone. Thousands more will find work in the supply chain.
The Czech Republic also applied for the construction of the TSMC factory. But in the final selection of Dresden, the geology of the place with its shock-resistant granite bedrock, the functioning cooperation between the industry and scientists, the support of the local government and also decades of experience played a role.
“When you start in the green field, everything is a risk,” says Manfred Horstmann of chip firm GlobalFoundries. “Normally you don’t have infrastructure, supply and services,” he enumerates for Politico.
Factory for Europe
The start of the construction of the factory near Dresden was accompanied by a ceremony attended by German Chancellor Olaf Scholz and TSMC director CC Wej. “It is important for the resilience of production structures around the world, but also for the future viability of the European continent and above all for the viability of Germany,” said Scholz.
The project will also be financially supported by the European Union, which approved the European Chip Act. Currently, the continent accounts for only eight percent of the world’s semiconductor production. It should rise to twenty percent by the end of the decade.
At the same time, the Union assumes that the demand for chips will double by the end of the decade. Growing interest in electric cars and self-driving cars may also play a role.
Preparing for the invasion
TSMC, which has most of its factories in Taiwan, perceives the importance of expansion into Germany. However, in a few years, the island may find itself in the hands of China, which considers it part of it and states that unification will occur even if violence is necessary. The situation would disrupt the supply chain and the entire world would experience a shortage of chips.
Therefore, foreign partners began to pressure the company to enter other markets. Therefore, factories in the United States and Japan are gradually growing, Germany is the third destination where TSMC is expanding. The company itself describes the first expansion into Europe as a “significant milestone”.
Company director Mark Liu said in an interview last year that if Beijing tries to take control of the factory, it will fail. “No one can control TSMC by force. If there is a military invasion (of Taiwan), they will find the plant out of business,” he was quoted as saying by Bloomberg.
Sources familiar with the situation at ASML, which supplies TSMC with the high-precision lasers needed to manufacture chips, spoke similarly. According to them, the device can be turned off remotely, an additional safeguard is provided by regular inspection of the machines – if this is not done, they cannot continue to function.
Companies are also increasingly discussing whether or not to create a replacement headquarters outside the borders of the island, which would serve as an insurance policy for further production. “In the event that something happens in Taiwan, it will give them an alternative control system across the border that they can immediately activate,” Rauniei Kchuo from the consulting firm KPMG explains to the Financial Times why their clients turn to them.