TSMC's Germany plan remains uncertain, but decision will come in summer, according to sources

Misha Lu, DIGITIMES Asia, Taipei 0


Sources familiar with TSMC's plan in Germany indicated to DIGITIMES Asia that TSMC will reach a decision in summer regarding the construction of its German fab.

The German state of Saxony is long rumored to be the site considered by TSMC to build its first European fab. According to Frank Bosenberg, the managing director of the industrial alliance Silicon Saxony, pointed to a few advantages of the region when it comes to attracting foundries like TSMC, including its existing ecosystem of large players and skilled workforce that can change employer without moving. Bosenberg also added that Saxony offers a competitive funding landscape consisting of funding options not only by the region itself, but also by the German government and the EU.

"Following the Intel case, Saxony has increased effort of preparing larger areas for acquisition of industrial players," said Frank Bosenberg, referring to the strip of land near the town of Grossenhain as an example. The state government of Saxony and local district governments are planning to convert the 145-hectare space, formerly the site of a military airport, into an industrial park to accommodate megafabs like TSMC. Currently, the low availability of building-ready large empty industrial areas is a major obstacle faced by Saxony to atrract megafabs.

As TSMC misses its sales guidance for first-quarter 2023, TSMC will slow down its pace of capacity expansion in various sites in Taiwan, according to sources, who revealed that TSMC's suppliers of equipment, materials and construction services have received notifications from the foundry that its projects in Taiwan will be delayed for six months to one year, though the fab projects in the US and Japan will proceed as planned.

Taiwanese media Economic Daily, citing TSMC supply chain, also recently reported that the foundry has been requesting its suppliers to provide preliminary quotations on shipping equipment and material to Germany. Though the TSMC has indicated that it is still evaluating the plan in Germany, the latest update leaves one wonder if TSMC is wrapping up its German plan, and if it will include an update on the matter in its earnings call on April 20.

Economic Daily also reported that a portion of TSMC suppliers will keep their production facilities in Taiwan and ship the finished equipment to TSMC's overseas sites, since the manufacturing costs in the US and Europe remain comparably high. The suppliers will only consider to shift productions abroad when orders for TSMC's overseas fab reach a certain economic scale.