Germany is accelerating its investment in Taiwan's semiconductor sector, with ripple effects expected across Europe, according to Dr. Eva Langerbeck, Chief Representative and Executive Director of the German Trade Office Taipei. This strategic move is set to reshape the European semiconductor landscape.
The cornerstone of this acceleration is Taiwan Semiconductor Manufacturing Company's (TSMC) planned US$11 billion investment in Dresden, marking a significant milestone in the European semiconductor industry. "TSMC's investment is a big chance for Germany and also Europe," said Dr. Langerbeck. "It will bring new jobs and hopefully also increase research and development activities in the area of innovation."
The facility, operating under the moniker European Semiconductor Manufacturing Company (ESMC), is a joint venture with European heavyweights Bosch, Infineon, and NXP Semiconductors. Slated to begin operations in 2027, the plant will focus on 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technologies, primarily serving the automotive and industrial sectors. This move aligns with Europe's push to secure chip supplies for critical industries amid global shortages and geopolitical tensions.
Credit: AFP
"Everyone is happy about the TSMC investment," Langerbeck said, noting the potential for innovation and job creation, not just in Germany but across Europe. "At least 25 suppliers have expressed interest in investing alongside TSMC, most of them likely to set up operations in Saxony."
Saxony, which has emerged as a key hub for Europe's semiconductor ecosystem, could see further growth as suppliers aim to minimize logistics costs by locating near major players like TSMC. However, the benefits of these investments could extend beyond Germany, as other European countries, including the Czech Republic, may attract some of these suppliers under the European Chips Act.
"Regulations won't be an issue since it's all within the Eurozone," Langerbeck explained, adding that localizing production in Europe ensures supply chain resilience, a key factor amid global disruptions.
The heightened visibility of Taiwan in global media due to the semiconductor industry has also drawn the attention of German businesses across various sectors. Inquiries from German firms interested in Taiwan have increased, with sectors like machinery, healthcare, and renewable energy leading the charge.
While semiconductor investment has dominated the headlines, Langerbeck pointed out that smaller German companies, often unnoticed by the public but vital to the supply chain, are also exploring opportunities in Taiwan. "These SMEs are the backbone of the German economy and play crucial roles in industries such as petrochemical and biotechnology," she said.
As for the R&D footprint, Langerbeck indicated that it depends on individual corporate strategies. Companies like Infineon, for example, have already established R&D centers in Taiwan, reflecting a trend toward regional localization to better serve markets.
"We do keep getting investment inquiries on a regular basis every week," Langerbeck noted, highlighting interest not just in semiconductors but also in related fields such as machinery, healthcare, and renewable energy. "We expect to hear more good news by early 2025," she said.
For German companies looking to relocate operations from China, Langerbeck suggested Southeast Asia as a favored alternative, particularly Malaysia and Thailand, depending on industry needs. However, Taiwan remains an attractive option for businesses prioritizing advanced manufacturing and skilled labor over cost-cutting.
German firms are taking a long-term view of their investments in Taiwan. As Germany and Taiwan deepen their ties, the potential for collaboration across industries looks promising. With Taiwan's growing role as a global semiconductor powerhouse, German companies are eager to strengthen their foothold in this strategic market.
