TSMC Board to Approve First European Fab This Week: Report

TSMC's board of directors is set to formally approve building a fab in Germany on Tuesday, Reuters reports citing German daily Handelsblatt. Based on previous reports, the German government has agreed to provide TSMC subsidies totaling €5 billion ($5.49 billion), so the board's approval is expected. 

The upcoming fab will focus on the production of chips used by automakers, so it will adopt time-proven process technologies and will focus primarily on manufacturing various microcontrollers on production nodes like 28nm. It is noteworthy that the fab will operate as a joint venture with partners like Bosch, Infineon, and NXP, according to Reuters, which is an unexpected decision as TSMC prefers to run its fabs itself. Yet, since the company makes loads of products for Bosch, Infineon, and NXP, it may make sense to build a joint fab. 

TSMC has been in discussions with the German state of Saxony about building a fab in Dresden to make chips for German and Austrian automakers since 2021. The recent report from Handelsblatt, quoting government sources, suggests that the project is nearing approval from the TSMC board of directors. Meanwhile, the German government and the State of Saxony have reportedly already approved subsidies for TSMC in a move that aligns with the EU's initiative to increase the output of chips in Europe and reduce dependency on Asian chip suppliers.

Once TSMC's board approves the venture, the foundry could formally announce the intention and reveal official details regarding government funding. However, the European Commission will make the ultimate decision on this endeavor.

For now, neither TSMC nor the German government has formally confirmed any plans for the fab. Nonetheless, TSMC has confirmed that it was looking forward to building a fab in Germany to produce microcontrollers.