Major Chip Manufacturer TSMC Starts Building Factory in Dresden

The world’s largest semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), has officially begun construction of a new chip factory in Dresden, Germany. The groundbreaking ceremony, attended by German Chancellor Olaf Scholz, Saxony’s Prime Minister Michael Kretschmer, and European Commission President Ursula von der Leyen, marks a significant milestone for what is expected to become a cornerstone of Europe’s growing semiconductor industry. The factory is slated to start production by 2027 and is part of a joint venture with Bosch, Infineon, and NXP Semiconductors, all of which already have established operations in the region.

Strategic Importance of the New Factory

This development is seen as a critical step toward reducing Europe’s dependency on Asian semiconductor production. TSMC’s decision to establish its first European plant in Dresden aligns with broader efforts by the European Union and the German government to bolster the continent’s microchip manufacturing capabilities. The facility, located in the region known as “Silicon Saxony,” will primarily produce chips for the automotive industry, which is increasingly dependent on reliable semiconductor supplies due to the rise of electric and connected vehicles.

The plant represents a €10 billion investment, with half of the funding expected to come from the German government. The European Semiconductor Manufacturing Company (ESMC), the joint venture behind the factory, is designed to be a collaborative effort. TSMC will hold a 70% stake in the venture, while Bosch, Infineon, and NXP will each hold 10%. This cooperation underscores the strategic importance of the project for both Germany and the broader European Union.

Economic and Employment Impact

The new factory is expected to create 2,000 direct jobs, with indirect employment expected to be much higher as related industries and services expand to support the plant. The influx of workers and their families is expected to place additional demands on the region’s infrastructure. As a result, local governments are already preparing for a significant population increase. Plans are underway to build new housing, expand public transportation, and increase the availability of school and childcare facilities. The regional government anticipates that the microelectronics sector could require an additional 27,000 workers by 2030.

To meet the demand for skilled labor, efforts are being made to train a new generation of semiconductor specialists. The first cohort of 30 students from Saxony has already returned from a six-month study program in Taiwan, and a dual vocational training program in microelectronics is set to launch next year. Additionally, TSMC plans to recruit skilled workers from Taiwan to support the Dresden operations.

Environmental and Infrastructure Challenges

The rapid expansion of Dresden’s semiconductor industry brings with it significant infrastructure challenges, particularly in terms of environmental impact. The new factory, alongside existing plants operated by companies such as Infineon and Globalfoundries, will substantially increase the city’s industrial wastewater output. To address this, a new 10-kilometer-long wastewater pipeline, known as the “Industriesammler Nord,” is being constructed. This pipeline will connect the various semiconductor plants to Dresden’s main sewage treatment facilities and is expected to handle double the current wastewater volume by 2027.

Additionally, the increased industrial activity is expected to strain other aspects of Dresden’s infrastructure, such as energy supply and transportation networks. The local government is working with surrounding municipalities to ensure that the region can accommodate the expected growth without compromising the quality of life for existing residents.

Broader Implications for Europe

The establishment of TSMC’s Dresden factory is a significant victory for Europe’s semiconductor ambitions. As the global demand for semiconductors continues to grow, Europe’s ability to produce its own chips will be critical for maintaining economic stability and technological independence. The project also highlights the importance of public and private sector collaboration in achieving strategic goals.

The presence of TSMC in Dresden is expected to attract further investment to the region, potentially leading to the establishment of additional semiconductor facilities and related businesses. While there are concerns about potential labor shortages in other sectors, local industries are optimistic that the overall economic boost will outweigh any challenges.

As construction progresses, the Dresden factory will become a focal point for Europe’s efforts to become a leader in semiconductor technology, positioning “Silicon Saxony” as a key player in the global electronics supply chain.