TSMC European plant being considered; Apple chips unlikely

The first-ever TSMC European plant is being considered by the Taiwanese chipmaker, to be located in Dresden, Germany.

It is not envisaged that the plant would make chips for Apple, but the company says that at present “no possibility is being ruled out” …

Background

The Taiwanese Semiconductor Manufacturing Company is the sole supplier of Apple’s A-series and M-series chips, thanks to its strong technical lead over rival chipmakers.

China’s increasingly militant attitude toward Taiwan has increased concerns about potential interference with the island’s exports, up to and including a potential Chinese blockade and invasion.

For that reason, TSMC has for some years been planning to diversify production, including at least two plants in Arizona, which will make some older chips for Apple. It’s also building a plant in Japan, in partnership with Sony.

So far, the Taiwanese company has been keen to keep its most advanced chip fabrication tech inside Taiwan, both to protect its intellectual property and because the smallest processes require a huge amount of financial investment, as well as oversight by a limited number of qualified personnel. However, it is working on building overseas plants for larger and older processes.

TSMC European plant

The Financial Times reports on plans for a TSMC European plant.

TSMC is in advanced talks with key suppliers about setting up its first potential European plant in the German city of Dresden […] The Taiwanese company is sending a team of senior executives to Germany early next year […]

The trip will be the second in six months by TSMC executives and a final decision on whether to invest billions of dollars in a plant, which could begin construction as early as 2024, is expected to follow soon after, the people said.

The Arizona plants will be making 4nm chips in 2024, and 3nm in 2026. This two- to three-year lag behind Taiwan means the US plant won’t be able to make the latest A-series and M-series chips, but will be able to make them for older Apple devices still sold by the company.

At present, this won’t be the case for the planned Dresden plant. That is said to be focusing on supplying chips to the automotive industry, which use much larger processes – in the order of 22nm and 28nm. However, a TSMC spokesperson said that it wasn’t ruling out any possibility.

Government subsidies sought

One common factor for overseas TSMC plants is that the company seeks government subsidies to help out with the extremely high setup costs. In the US, the CHIPS Act created subsidies for chipmakers from any country to build US plants, and the European Union is on track to approve €43B ($45B) in subsidies for the same in Europe.

An additional concern, however, is whether too much simultaneous overseas expansion might stretch TSMC’s senior workforce too thinly. There are a limited number of engineers with the expertise needed to oversee the construction and operation of chipmaking plants, and working on plants in the US, Japan, and Germany might prove challenging. Sticking to older processes would reduce that strain.

Dresden photo: Andres Garcia/Unsplash

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