Germany's Saxony region, already a key player in Europe's semiconductor industry, is deepening its ties with Taiwan as TSMC expands its European footprint. This decades-long partnership, now backed by EUR50 billion in industry investments, aims to position Saxony as a global semiconductor powerhouse, centered in Dresden's "Silicon Saxony." Beyond chips, this strategic push opens doors for collaboration in electric vehicles (EVs), robotics, and hydrogen energy, further solidifying Europe's tech leadership.
"TSMC's expansion into Germany has put us on the map for many Asian companies, especially those from Taiwan," said Thomas Kralinski, Head of the Saxony Ministry of Economic Affairs. Saxony, which he describes as a long-standing semiconductor powerhouse, could benefit from greater collaboration not just in chips, but also in other high-tech sectors. "There's huge potential for deeper ties, particularly in industries like EVs and mechanical engineering."
Credit: AFP
Saxony has emerged as a leading semiconductor hub, home to over 3,650 companies and more than 76,000 employees in the microelectronics and ICT sectors. Producing one-third of Europe's chips, it boasts the continent's largest microelectronics cluster and the fifth largest globally. Andreas Lippert, COO of Investor Services at Saxony Trade & Invest Corporation, emphasizes, "We have such a large variety of semiconductor players in a small place." With TSMC's entry, Saxony strengthens its position as a key player in the global semiconductor industry.
Recent investment announcements from industry leaders like TSMC, Intel, Infineon, Bosch, and GlobalFoundries are part of a larger trend, with over EUR50 billion planned for the semiconductor industry within a 300km radius of Silicon Saxony. Frank Bösenberg, Managing Director of Silicon Saxony, highlighted the region's unique strengths: "What sets us apart is not just semiconductor production but our ability to combine hardware, software, and connectivity technologies. We've cultivated a complete value chain, from R&D to production, supported by top-tier universities and a semiconductor-savvy regulatory environment." Silicon Saxony, the region's tech cluster, is home to several fabs and major suppliers, creating an environment comparable to Taiwan's famed Hsinchu Science Park.
Credit: Silicon Saxony
Despite its strengths, Saxony faces challenges as it grows its semiconductor industry. Kralinski acknowledges that finding the right personnel is a significant challenge. To address this, the government is fostering cooperation between universities and companies like TSMC, facilitating student exchanges and internships.
Another potential challenge is the integration of different work cultures. Germany's strong labor union tradition differs from practices in some Asian countries. However, Kralinski sees this as an opportunity: "One of the secrets of German economic success is the close cooperation between companies and labor unions. I'm pretty sure that this will be part of the success story of Taiwanese companies as well when they come to Germany."
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Saxony's role as a growing hub for EV production complements its semiconductor industry. "Every fourth electric vehicle in Europe is produced in Saxony," Kralinski said, citing the presence of major manufacturers like Volkswagen, BMW, and Porsche. The region's focus on battery production and hydrogen energy further strengthens its leadership in the green transition, offering additional opportunities for Taiwanese-German collaboration.
The semiconductor push is part of a broader strategy to diversify Saxony's economy, which has proven resilient amid global shifts. The region is also positioning itself as a center for innovation in emerging technologies such as organic and flexible electronics, 5G/6G communications, MEMS, sensors, automation, and AI.
Aligned with the European Chips Act, Saxony's semiconductor surge is poised to bolster the EU's competitiveness in the semiconductor market. Yet, questions remain about how European chip manufacturing will fare against established Asian powerhouses. As these multibillion-euro projects move from planning to production, the global semiconductor industry will be watching closely to see if Saxony's bold investments can reshape the European tech landscape and secure a larger share of the global market.
