TSMC, the Taiwanese company and world’s largest contractor chip manufacturer, is going bigger in Europe. The company’s decision to extend its operations with several new plants comes as the demand for AI and automotive chips continues to rise sharply. In Dresden, Germany, TSMC has already broken ground on its first plant, which will produce chips vital for the automobile industry, specifically using 22nm and 28nm processes.
As vehicle production stumbled during the pandemic due to chip shortages, this move aims to help alleviate such bottlenecks. The factory, a joint venture between TSMC and other partners, will produce up to 40,000 wafers per month and provide a much-needed supply chain buffer to Europe’s automotive industry by 2027.
Massive Investment to Boost Europe’s Chip Supply
A €10 billion investment plan underpins TSMC’s new fab in Dresden. The company controls 70% of the project, with Bosch, Infineon Technologies, and NXP Semiconductors sharing the rest.
A factory in Germany represents a vital part of Europe’s push to build up its semiconductor production capabilities. When fully operational, the plant will not only reduce Europe’s reliance on imports but also create 2,000 high-skilled jobs, strengthening the region’s tech ecosystem.
The development isn’t just about Europe—TSMC’s global strategy includes key sites in Japan and the U.S. TSMC has been diversifying its manufacturing footprint, aiming to mitigate risks related to the U.S.-China trade disputes, among other geopolitical tensions.
U.S. and Japan Also See Expansion of TSMC Facilities
In the United States, TSMC has recently started production of Apple’s A16 chips at its facility in Arizona. The new site employs advanced 5nm technology, showcasing the company’s commitment to advancing semiconductor manufacturing on U.S. soil.
Meanwhile, in Japan, TSMC is catering to corporations like Sony and Toyota, delivering semiconductors via 40nm, 28nm, and 22nm processes. Another fab is also underway in Japan’s Kumamoto Prefecture, which will focus on more advanced chips using 6nm and 7nm technologies.
Demand for AI Chips Drives Financial Success
Strong demand for artificial intelligence-related semiconductors has fueled TSMC’s financial performance. With analysts expecting a 40% jump in third-quarter profits, the company is clearly benefiting from its position as a major supplier of chips to AI-driven sectors. Customers like Apple and Nvidia are driving growth, particularly as more devices and services rely heavily on AI technologies.
TSMC’s revenue in September 2024 rose nearly 40% from the previous year, and its share price has skyrocketed by 80% since early 2024. Analysts project the company will post a net income of NT$298.2 billion (€8.49 billion) for the third quarter of 2024, marking a sharp increase from the same period in 2023.
Last Updated on November 7, 2024 2:35 pm CET
