Nationalism a threat to industry, says German chancellor at new EU-funded chip plant

German Chancellor Olaf Scholz warned against nationalism in the country’s east at the groundbreaking ceremony for a semiconductor plant in Dresden on Tuesday, warning that such resentment endangered investments in key future technologies.

“We still need a pro-European Germany that’s open to the world, instead of nationalism and resentment,” Scholz said in a speech at the site of the 10-billion-euro ($11.08 billion) plant planned with Taiwanese chip giant TSMC and other investors.

“Openness to the world and confidence - if we preserve this, if we defend it, then this major investment will certainly not be the last that we experience in Silicon Saxony and in eastern Germany,” he said.

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Germany’s domestic chip industry is based in the eastern state of Saxony, where rising support for populist parties including the far-right AfD has rattled mainstream parties and executives ahead of local elections set for Sept. 1.

Scholz described semiconductors as crucial to the country’s industrial survival and climate targets, and stressed the importance of boosting production in Germany to reduce European dependence on others within global supply chains.

The European Commission approved 5 billion euros ($5.5 billion) in German state aid to support a new microchip plant in Dresden for the European Semiconductor Manufacturing Company (ESMC).

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The award for the project led by Taiwan’s TSMC is the biggest state subsidy granted so far under the EU Chips Act, and Germany’s first.

“This is a true win-win situation for all of us,” EU Commission’s President Ursula von der Leyen said during the inauguration ceremony for the plant.

German Economy Minister Robert Habeck praised the decision and said his government would maintain the fast pace of the project, which targets production in 2027, and finalise funding.

ESMC is a joint venture led by TSMC, the world’s largest contract chipmaker, with European firms Robert Bosch, Infineon and NXP each taking a 10% stake.

The Dresden facility is forecast to cost 10 billion euros in total to build.