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The European Commission said it has approved 5 billion euros ($5.5 billion) in aid from the German government to help the European Semiconductor Manufacturing Company (ESMC) build and operate a new microchip manufacturing plant in the German city of Dresden.
ESMC is a joint Venture Taiwan Semiconductor Manufacturing Co., Ltd.NYSE:TSM), Robert Bosch GmbH, NXP Semiconductors (NXPI) and Infineon Technologies AG (OTCQX:IFNNY).
Last August, TSM said total investment was expected to exceed 10 billion euros (about $11 billion), including capital injections, debt financing and support from the EU and German governments. The factory will be operated by TSM.
The European Commission said on Tuesday that the project aims to meet demand for automotive and industrial applications.
The agency noted that the facility will be the first of its kind in Europe, as there are currently no comparable mass production plants for the specific technological capabilities offered.
According to the European Commission, ESMC will be the first open foundry to produce high-performance chips based on 300mm silicon wafers in 28/22nm and 16/12nm technology nodes using Field Effect Transistor (FinFET) technology with logic, mixed-signal, radio frequency and embedded non-volatile memory technology processes.
The facility will operate as an open foundry, allowing any customer, not just shareholders like TSM, to order specific chips.
The factory is expected to be fully operational by 2029, producing 480,000 silicon wafers per year.
EU regulators assessed the German measures under the European Chip Act.
The EU’s €43 billion chip law announced for 2023 is aimed at supporting domestic chip manufacturing. In May, Belgium-based nanoelectronics research hub imec said that under the European Chip Law, certain European research institutes will get €2.5 billion (about $2.72 billion) in funding to set up pilot lines and develop and test the next generation of advanced chips.
The United States, China, Japan and South Korea are some of the countries stepping up efforts to bolster domestic chip manufacturing to stay ahead in the AI race.
In the United States, CHIPS Act funding is aimed at expanding American semiconductor manufacturing and research, especially in advanced semiconductors. Several companies have received funding under the act, including Intel (INTC), SK Hynix, Samsung (OTCPK:SSNLF), TSM, and Micron Technology (MU).
TSMC -0.32% $174.88 in pre-market trading on August 20th
