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Germany took an important step toward greater self-sufficiency in key European technologies on Tuesday. Construction began on a semiconductor plant in Dresden, near the Czech border, that will be led by TSMC, the Taiwanese company known for producing the world’s most advanced chips that the continent desperately needs for cars and other industries.
Europe woke up to its own lack of preparedness and reliance on foreign suppliers during the coronavirus pandemic, when production of chips was disrupted and shortages ensued. They are found in mobile phones, computers, cars, medical and military equipment and even common appliances like refrigerators or washing machines.
When covid-19 was brought under control, a global chip production race began. The United States, South Korea, and China began investing heavily in factories.
Staron’s player in this field is Germany. Chips have been produced in Dresden since the 1980s, when Siemens and AMD joined the German electronics and high-tech headquarters. Bosch joined them three years ago, and Infineon joined them last year. This is also the reason why Dresden is nicknamed “Silicon Saxony”, referring to Silicon Valley, the American innovation center.
Now, they are joined by the Taiwanese company TSMC, a global leader in semiconductor manufacturing. The first chip is expected to be produced by the end of 2027 from the new plant, which will cost 10 billion euros (252 billion kroner). The plant will produce up to 480,000 chips of various sizes per year. As a result, they will turn to industrial and automotive production, the Japanese daily writes. Nikkei Asia.
Germany will contribute half of the funding, while TSMC will pay the other 88 billion kroner, the agency reported. ReutersThe ESMC (European Semiconductor Manufacturing Company) project will create new jobs – around 2,000 in semiconductor production alone. Thousands more will find jobs in the supply chain.
The Czech Republic also applied to host a TSMC plant. But in the final selection of Dresden, the location’s geology and its earthquake-resistant granite bedrock, effective cooperation between industry and scientists, support from the local government, and decades of experience all played a role.
“When you start getting into the green field, everything is risky,” said Manfred Horstmann of chip company GlobalFoundries. “Often you don’t have the infrastructure, the configuration and the services,” he listed for servers. Politico.
European Factory
German Chancellor Olaf Scholz and TSMC board member CC Wej attended the opening ceremony near Dresden. Scholz said: “This is important for the resilience of production structures around the world, but also for the future viability of the European continent and especially of Germany.”
The project will also receive financial support from the European Union, which approved the European Chip Act. Currently, the African continent produces only 8% of the world’s semiconductors. By the end of the century, this share should rise to 20%.
Meanwhile, the alliance expects demand for chips to double by the end of the decade. Growing interest in electric and self-driving cars may also play a role.
Preparing for an Invasion
TSMC, which has most of its factories in Taiwan, recognizes the importance of entering Germany. However, in a few years, the island could find itself in the hands of China, which considers it part of its territory and says it will achieve reunification even if violence is necessary. Such a situation would disrupt supply chains and the entire world would suffer from chip shortages.
As a result, foreign partners began to put pressure on the company to enter other markets. As a result, factories in the United States and Japan are gradually being built up, and Germany is the third destination for TSMC’s expansion. The company itself described its first foray into Europe as an “important milestone.”
Company director Mark Liu said in an interview last year that if Beijing tried to control the factory, it would fail. “No one can control TSMC by force,” the agency quoted him as saying. “If there was a military invasion (from Taiwan), they would find the factory closed.” Bloomberg.
Sources familiar with the situation at ASML, which supplies TSMC with high-precision lasers needed to make chips, made similar comments. According to them, the equipment can be shut down remotely and regular inspections of the machines provide additional safeguards – if they are not done, they cannot continue to operate.
Companies are also increasingly discussing whether to establish an alternative headquarters off the island, which would serve as insurance for further production. “If something happens in Taiwan, this would provide them with an alternative control system across the border that they would be able to activate immediately,” he explained. Financial Times Rauniei Kchuo of KPMG Consulting explains why their clients turn to them.
Video: China conducts military exercises near Taiwan (8/4/2022)
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