**Europe’s Strategy to Attract Technology Giants and Boost Supply Chain Resilience**
**Europe’s Call for Tech Companies: TSMC Announces New Factory in Germany**
The second-largest chip manufacturer in the world, Taiwan Semiconductor Manufacturing Company (TSMC), has recently announced its plans to open a €10 billion ($11 billion) factory in the German city of Dresden. This move comes as part of Europe’s strategy to address the geopolitical tensions affecting the global supply chain. TSMC’s decision to establish a presence in Europe demonstrates the success of Europe’s efforts to attract the world’s largest technology companies.
**Intel’s Investment in Germany’s Chip Manufacturing**
Earlier this year, Intel, another major player in the chip manufacturing industry, announced its €30 billion ($32 billion) investment in Magdeburg, Germany. This investment is considered one of the largest foreign direct investments in Germany’s history. Similar to TSMC’s case, Intel’s decision to invest in Germany is supported by a subsidy from the German government. To bolster the semiconductor industry, the German government has allocated €20 billion ($22 billion) in subsidies.
**Using Subsidies to Entice Critical Tech Manufacturers**
Both TSMC and Intel’s investments in Germany are accompanied by government subsidies. This tactic is not unprecedented, as central governments have been using subsidies to entice critical tech manufacturers to their countries. U.S. President Joe Biden, for instance, introduced the CHIPS and Science Act to promote chip production in the United States and reduce reliance on foreign suppliers. The program will invest $280 billion in the American semiconductor industry, with $52 billion allocated for subsidies. Micron Technology, a semiconductor company, has also committed $40 billion to chip production in the U.S. market by 2030.
In the case of Germany, Intel is set to receive a €10 billion ($11 billion) subsidy, while TSMC’s Dresden factory is expected to secure €5 billion ($5.5 billion) in subsidies. These subsidies serve as incentives for these companies to establish manufacturing facilities in Germany and contribute to the country’s strategic capacity and technology needs.
**Europe’s Focus on Boosting Semiconductor Industry**
Europe, facing geopolitical tensions in chip-making hubs like Taiwan, is taking proactive measures to ensure the resilience of its semiconductor supply chain. Warren Buffett, a veteran investor, even divested his multibillion-dollar stake in TSMC earlier this year due to concerns over the stability of the region. China’s claim of sovereignty over Taiwan has further heightened tensions, with the possibility of forceful action if Taiwan declares independence.
To secure vital chip supplies, the European Union approved the EU Chips Act, injecting €43 billion ($47 billion) into the semiconductor industry. The European Commission has also relaxed regulations governing aid to companies such as Intel and TSMC. While Europe has not directly competed with Asia for chip supremacy, it has carved out a niche in processors and semiconductors for specific uses, presenting a significant opportunity for chip companies.
**European Aspirations in the Semiconductor Market**
Europe aims to achieve a 20% global market share in the semiconductor industry by 2030, up from the current 8%. The region’s focus on automotive and industrial fields, paired with its commitment to innovation, makes it an attractive destination for semiconductor companies. TSMC, in collaboration with Robert Bosch, Infineon Technologies, and NXP Semiconductors, will establish its new facility in Dresden, Germany. TSMC will own 70% of the joint venture, while the other companies will each have a 10% equity stake.
According to TSMC CEO CC Wei, this investment in Dresden showcases TSMC’s dedication to meeting customers’ capacity and technology requirements. Similarly, Intel’s expansion in Germany aims to enhance the European Union’s semiconductor supply chain and increase its resilience.
**Germany’s Determination to Reduce Reliance on Chinese Trade**
German Chancellor Olaf Scholz has positioned Germany at the forefront of Europe’s efforts to expand its chip-making capacity. With China imposing export restrictions on rare earths used in chip production, Germany, being among the top importers of these metals, wants to reduce its dependence on Chinese trade. Chancellor Scholz emphasized the need to build resilience and relocate certain industries to Europe and Germany to ensure their stability.
Europe’s strategy of attracting technology giants and bolstering its semiconductor industry shows promising results with TSMC and Intel’s significant investments in Germany. By offering subsidies, relaxing regulations, and prioritizing chip production, Europe aims to enhance its supply chain resilience and achieve a prominent position in the global semiconductor market.