ESMC Breaks Ground for Dresden Fab with €5M Subsidy Approval

The European Commission has given the green light to German plans aimed at supporting the construction and operation of a wafer fab with an estimated cost of €10 billion. This decision marks a significant milestone for Germany's semiconductor industry and underscores the country's commitment to bolstering its technological capabilities.

German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen were scheduled to visit Dresden today, highlighting the importance of the subsidy approval. Any uncertainty or delay in the process could have potentially led to an awkward situation for the officials.

The wafer fab, which will be operated by TSMC, is set to commence construction in August. TSMC will own 70 percent of the facility, with NXP, Infineon, and Bosch each holding a 10 percent stake. The ceremony marking the beginning of the construction is expected to be officiated by TSMC's chairman and CEO, CC Wei.

While the fab is not designed to operate at the cutting edge of technology, it will focus on producing chips for automotive and industrial applications using 28/22nm and 16/12nm nodes with FinFET technology. However, there are calls from European politicians and tech companies for ESMC to swiftly transition to producing more advanced chips at 6nm and 3nm nodes to enhance domestic chip manufacturing capabilities.

ESMC, the entity overseeing the fab, will function as an open foundry, allowing other companies beyond the initial European shareholders to utilize the facility. Additionally, small European businesses and universities will have access to the foundry's resources, fostering collaboration and innovation within the region.

Construction of the wafer fab is slated to commence in the second half of 2024, with production expected to kick off by late 2027. By 2029, the facility is projected to be operating at full capacity, producing up to 40,000 wafer starts per month. The European Commission's assessment of the subsidy concluded that it aligns with EU state aid regulations, citing its minimal impact on competition and trade within the EU and its crucial role in fortifying Europe's semiconductor supply chain.