Industry sources pointed out that TSMC is considering delaying its new Europe factory to around 2025, two years later than previously estimated. The possible reason for this delay is that the automotive chip shortage is no longer as severe as it once was, and the fact that most automotive chip clients can now shift their orders to fabs in Japan and the US.
According to reports by Taiwan's Economic Daily, the previous automotive chip shortage has caused TSMC to not only accelerate production adjustments at its Taiwanese sites, but also focus on the automotive sector for its Japan/Europe sites. However, as the chip business cycle corrects itself, fabs now have sufficient production capacity for automotive chips. This has improved the chip shortage to a certain degree, even reaching the supply/demand balance.
Market rumors indicated that TSMC was going to finalize its Europe fab plans within this year (2023), having already sent teams to inspect the sites in places like Germany. However, with major automotive chip suppliers like Infineon, Renesas, and Texas Instruments (TI) announcing production expansions, the automotive chip shortage may not be as urgent as it once was. Thus, TSMC has decided to slow down its Europe fab plans for now.
Industry analysis stated that it's not necessarily bad for TSMC to slow down its plans for Europe. With the economy still experiencing significant fluctuations and inflation remaining at a high level, building a fab in Europe is estimated to be much more expensive than building one in the US or Japan. It's also more challenging for TSMC's overseas employee deployment.
If TSMC does indeed delay its Europe fab, sources pointed out that orders from automotive chip clients in Europe could remain in TSMC's Taiwan campus. They can even be transferred to new factories in Japan and the US, allowing TSMC to utilize the capacity of its overseas sites.
TSMC revealed that it was in contact with partners and clients to evaluate the possibility of building a fab in Europe in its earnings call this January. The fab will be dedicated to processes used in automotive technology. Regarding this rumored delay, TSMC has stated that it stands by what was said in its earnings call. There have been no new responses as of now.
