TSMC continues to expand out of Taiwan, to set up more fabs, chip plants across Europe

Taiwan Semiconductor Manufacturing Co. (TSMC) is ramping up its global expansion efforts, with plans to establish more chip manufacturing plants across Europe.

The focus is on the booming market for artificial intelligence (AI) chips, according to Taiwan’s National Science and Technology Council Minister, Wu Cheng-wen, during a recent interview with Bloomberg.

As TSMC continues to diversify its operations beyond Taiwan, the company is already laying the groundwork for future projects.

European expansion begins in Germany
TSMC has already started building its first fabrication plant in Dresden, Germany, marking the company’s entry into the European Union. This facility represents a significant investment of €10 billion (about $10.9 billion), with state subsidies covering roughly half of the cost. Production is expected to begin by the end of 2027.

While no specific timeline has been shared for additional European plants, Minister Wu indicated that TSMC has its sights set on further growth in different market sectors within Europe. The decision on whether to expand the Dresden facility or build new ones in other parts of Europe remains under evaluation.

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This expansion is part of a broader strategy to tap into Europe’s next-generation chip design sector. While established European chipmakers like NXP Semiconductors and Infineon Technologies focus on more mature technologies, newer players like Black Semiconductor and Axelera AI are working on innovative designs.

These developments provide TSMC with a variety of opportunities to collaborate with companies and meet growing demand, particularly in the AI chip market.

Strategic moves amid global geopolitics
TSMC’s expansion is driven not only by market opportunities but also by geopolitical considerations. Tensions between Taiwan and China have prompted the chipmaker to diversify its production locations to reduce risk.

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In addition to Europe, TSMC is investing heavily in the United States and Japan. The company has committed over $65 billion to establish three plants in Arizona, which Minister Wu believes, despite initial costs, will benefit Taiwanese companies in the long run by boosting their competitiveness.

The company’s global footprint is also having a ripple effect on nearby countries. For example, the Czech Republic is positioning itself to benefit from TSMC’s new Dresden site.

Taipei and Prague have developed close ties in recent years, and the Taiwanese government is considering supporting TSMC suppliers in setting up operations near Dresden. This could open up joint research opportunities between Taiwanese and Czech institutions, further strengthening their relationship.

AI chips at the centre of the focus
AI chip production, particularly for US-based companies like NVIDIA and AMD, will be the main focus of TSMC’s European expansion. The increasing demand for these chips, essential for advanced computing and AI applications, positions TSMC as a key player in shaping the future of technology.

As the company builds its presence in Europe, it aims to tap into the growing AI market, providing advanced semiconductors to meet the needs of both established and emerging players in the industry.

While the company’s current focus is on completing ongoing projects, including the Dresden plant, it is clear that TSMC is laying the foundation for a future where Europe plays a much larger role in global chip manufacturing.