ESMC Breaks Ground on Dresden Fab with €5bn Subsidy Approval

The European Commission has given the green light to German plans to provide substantial support for the construction and operation of a wafer fab, with half of the estimated €10 billion cost to be covered. This decision marks a significant step towards bolstering Europe's semiconductor industry and reducing its reliance on imports.

German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen were scheduled to visit Dresden today, underscoring the importance of the project. Any uncertainty or delay surrounding the subsidy approval would have been a setback for both German and European efforts to strengthen semiconductor manufacturing capabilities.

The wafer fab in Dresden will be operated by TSMC, with the majority ownership (70%) held by the Taiwanese semiconductor giant. Other key stakeholders include NXP, Infineon, and Bosch, each owning 10% of the fab. The official groundbreaking ceremony, expected to be officiated by TSMC's chairman and CEO CC Wei, is set to take place in August.

While the fab is not designed to focus on cutting-edge technology, it will play a crucial role in producing chips for automotive and industrial applications using 28/22nm and 16/12nm nodes with FinFET technology. However, there are calls from European entities involved in AI and high-performance computing for ESMC to swiftly transition to 6nm and 3nm processes to enable the production of more advanced chips domestically.

ESMC, the entity overseeing the fab, will function as an open foundry, allowing not only the European shareholders but also other companies to utilize the facility. Additionally, small European businesses and universities will have access to the foundry's resources, fostering innovation and collaboration within the region.