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Driving Europe’s Chip Renaissance: TSMC’s Vision with ESMC

TSMC, in collaboration with Bosch, Infineon and NXP, is planning to invest in the European Semiconductor Manufacturing Company (ESMC), based in Dresden, Germany. This strategic move aims to meet the burgeoning demand for advanced semiconductor-manufacturing services, particularly in the automotive and industrial sectors.

The establishment of ESMC signifies a pivotal development in Europe’s semiconductor industry. The consortium’s final investment decision hinges on the allocation of public funds, a matter currently under consideration within the framework of the European Chips Act.

A substantial boon to the regional economy, ESMC’s establishment is set to generate about 2,000 high-tech, professional jobs. Construction of the fab is slated to begin next year, with production scheduled to kick off in 2027.

In an interview with EE Times, TSMC’s Nina Kao asserted that the joint venture (JV) between TSMC and its European partners is set to be a game-changer in semiconductor manufacturing. The utilization of TSMC’s advanced process technology promises to deliver the performance, efficiency and innovation needed to drive the automotive and industrial sectors forward, aligning perfectly with Europe’s lead markets and their burgeoning product developments, she said.

                                                                                        TSMC’s Nina Kao.
                                                                                               TSMC’s Nina Kao

“Bosch, Infineon and NXP are all long-time TSMC customers and key European players in the automotive segment and industrial semiconductor supply chain,” she added.

The total investment in ESMC is expected to exceed €10 billion, consisting of equity, borrowed funds and support from both the European Union and the German government. “To create a competitive investment environment, respective public financial support will be required,” Kao said.

Semiconductor process technology

The joint venture, initially focusing on the 16-/12-nm FinFET and 28-/22-nm planar CMOS nodes, brings together cutting-edge capabilities that will revolutionize various sectors, notably automotive and industrial applications. These nodes represent a substantial leap forward in Europe’s semiconductor technology, promising a host of advantages.

These process nodes align perfectly with the evolving needs and innovation roadmaps in the automotive and industrial sectors. The industrial landscape is increasingly demanding chips in the 28-nm, 22-nm, 16-nm and 12-nm categories. These nodes serve as crucial enablers for a wide range of applications, from network communication to consumer electronics and automotive solutions.

What sets these process nodes apart is their ability to deliver on the twin pillars of performance and efficiency. In particular, the 16-/12-nm FinFET technology excels at providing remarkable energy efficiency while maintaining robust performance. This makes it ideal for power-sensitive automotive systems, where efficiency and reliability are paramount.

Meanwhile, the 28-/22-nm planar CMOS process technology caters to a broader spectrum of applications.

According to Kao, the technology’s versatility allows it to be adapted for various purposes, including automotive, industry and telecommunication infrastructure. The technology variants developed here will explore innovative avenues, such as embedded flash, radio frequency, RRAM, MRAM and other non-volatile memories, ensuring that the Dresden fab stays at the forefront of innovation.

As Europe’s lead markets continue to evolve and demand advanced wafers in the 28-/22-nm and 16-/12-nm FinFET technology nodes, this collaboration is perfectly positioned to meet these requirements. Europe’s semiconductor industry is designing logic chips that align precisely with these nodes, catering to industrial and automotive applications. The result is a harmonious synergy between technological prowess and market demands.
                                                        TSMC Museum of Innovation.
                                                               Maurizio Di Paolo Emilio visited the TSMC Museum of Innovation in August.
                                                                                                    (Source: Maurizio Di Paolo Emilio)

Fab construction and timeline

Selecting Dresden as the location for the new fab facility was a decision driven by several key considerations. According to Kao, Dresden is strategically positioned as the heart of European microelectronics, housing some of the largest and most advanced chip factories in Europe.

One of the primary factors behind choosing Dresden is the existence of a well-established, industry-specific ecosystem. That affords access to local skills, expertise and other resources.

Dresden is the fifth-largest wafer-manufacturing ecosystem globally, Kao said.

Furthermore, Kao said Dresden has a commendable track record of investing in and expanding its microelectronics ecosystem. “This commitment to growth aligns perfectly with our mission to create a cutting-edge fab facility. The existing infrastructure and support networks in Dresden will significantly expedite our project’s development.”

Capacity and production

TSMC’s planned semiconductor fabrication facility is set to have a substantial monthly production capacity of 40,000 300-mm (12.8-inch) wafers—as early as 2030.

This capacity is on par with TSMC’s existing specialty technology fabs in Nanjing, China, and Kumamoto, Japan, while significantly exceeding that of its 200-mm specialty fabs in Taiwan.

This expansion aims to meet the increasing demands of the automotive and industrial sectors, which require reliable and substantial supplies of advanced semiconductor components, often utilizing the larger, 300-mm wafers.

In terms of production quality, TSMC has a proven track record in managing both planar CMOS and FinFET process technologies within the same facility. This experience is demonstrated in its existing facilities, such as Fabs 12, 14 and 15 in Taiwan, as well as TSMC Nanjing.

TSMC’s agility as a pure-play foundry allows it to efficiently deploy various process technologies, producing a diverse range of products for numerous customers, with 288 distinct process technologies and over 12,000 products manufactured for 532 customers in 2022.

This experience and flexibility ensure that TSMC can maintain efficient and consistent production quality within the planned facility, meeting the stringent demands of the semiconductor industry.

Technological advancement, innovation and workforce

Manufacturing and automation experience in scaling innovative semiconductor technology to the European JV fab is a major part of this relationship. TSMC will teach several hundred engineers for this purpose, strengthening the European semiconductor ecosystem and spurring future semiconductor growth.

The ESMC program is anticipated to improve local semiconductor talent development and technical breakthroughs, helping the European semiconductor sector grow and compete. ESMC’s founding matches with TSMC’s commitment to semiconductor technology innovation, sustainability and talent development in Europe.

“Our JV partners and European customers are leaders in automotive and industrial semiconductors,” Kao said. “We look forward to seeing how the close working relationship and partnership with European talent can lead to innovations powered by the strong specialty technologies offered by ESMC.”

ESMC is expected to create 2,000 high-tech posts. TSMC and its JV partners will collaborate with universities and research organizations like the Technical University of Dresden to attract top specialists locally and abroad.

According to Kao, several projects to promote semiconductor skills and education are also planned by the cooperation. These include attracting skilled workers to Saxony; promoting student exchanges between Taiwanese and German universities; transferring TSMC employees to Saxony for management training; investing in study infrastructure; improving school, vocational training and university infrastructures; and recruiting Taiwanese teachers. These steps seek to help ESMC’s employees and strengthen Europe’s semiconductor ecosystem.

Sustainability and environmental impact

TSMC is committed to integrating environmentally friendly practices and technologies into the construction and operation of the fab in Dresden. It emphasizes the importance of sustainability and environmental protection, and its approach is clear.

“The JV partners will build a ‘green’ fab,” in part by employing energy-efficient construction and water reclamation, Kao said. The partners are also determined to use 100% renewable energy in the new facility, she added, noting that TSMC’s overseas locations all use 100% renewable energy.

Furthermore, TSMC has specific strategies to minimize the carbon footprint and resource consumption of the Dresden facility. The company also plans to encourage suppliers to reduce greenhouse gas emissions and electricity use. TSMC and ESMC will work to achieve net-zero emissions by 2050.

Global semiconductor landscape and long-term vision

The establishment of ESMC contributes significantly to the global semiconductor supply chain and helps balance TSMC’s operations worldwide.

TSMC intends to become the trusted technology and capacity provider for the global logic IC industry. To achieve this, company executives aim to expand the company’s manufacturing footprint globally, increase customer trust, foster future growth and attract global talent.

ESMC plays a crucial role in addressing global semiconductor supply shortages and meeting the rising demands of various industries.

In 2020, the EU semiconductor market summed up to ~10% of the worldwide market ($46 billion, versus $467 billion globally). Automotive ($10 billion) and industrial ($14 billion) are the most important industry verticals for the EU semiconductor market. Today, the biggest share of chips produced in Europe range in the nodes from ≥180 to 40 nm, whereas the demand for 28- to 12-nm chips already accounts for 40% of the total European semiconductor market, according to 2021 data from Omdia.

TSMC’s ESMC venture holds a significant long-term vision for the European semiconductor industry and its global standing over the next decade. The establishment of a state-of-the-art FinFET-capable foundry in Europe dedicated to advanced CMOS technologies will greatly enhance supply-chain resilience in the region. This move will strategically strengthen the European semiconductor ecosystem, fostering innovation and enabling the development of cutting-edge technologies and solutions.

Looking to the future, the ESMC project is expected to foster collaboration with key research institutes, promoting the development of specialty wafer technology within the EU. It will create opportunities for partnerships with research and technology organizations, universities and other research players, contributing to the expansion and enrichment of the EU’s semiconductor ecosystem.

Ultimately, the ESMC initiative aims to position Europe as a significant player in the global semiconductor industry while enhancing its technological capabilities and research infrastructure.