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German chancellor, economics minister promise to resolve TSMC funding

11/28/2023 04:56 PM
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CNA file photo
CNA file photo

Berlin, Nov. 27 (CNA) German Chancellor Olaf Scholz and Economic Affairs and Climate Action Minister Robert Habeck have promised to solve investment subsidy issues for Taiwan Semiconductor Manufacturing Co. (TSMC) and Intel Corp. despite the country's budget woes.

Uncertainty over the funding to TSMC and Intel has arisen after a recent ruling by Germany's Federal Constitutional Court, which cast doubt over the funding aimed at subsidizing the building of local chip plants.

On Nov. 15, the Bundesverfassungsgericht ruled that the German government's decision to reallocate 60 billion euros (US$65.74 billion) of unused funding from pandemic support measures to its Climate and Transformation Fund in 2022 was unconstitutional.

Some of the 60 billion euros had been designated to go to subsidies in support of investments by companies such as TSMC and Intel in Germany.

The court ruling has raised questions over whether the federal government of Germany will be able to deliver on its subsidy promises.

TSMC, the world's largest contract chipmaker, is planning to set up a joint venture to build a semiconductor fab in Dresden in the state of Saxony.

It will hold a 70 percent stake in the joint venture, called European Semiconductor Manufacturing Co., with investment partners Bosch, Infineon Technologies and NXP Semiconductors expected to each hold a 10 percent stake.

For Intel, the American chip giant is planning to build a wafer fab in Magdeburg in the neighboring state of Saxony-Anhalt.

Berlin has promised 5 billion euros in subsidies to TSMC, which together with its partners is expected to invest a total of 10 billion euros in its new plant, while Intel has been promised 9.9 billion euros in subsidies for its 30 billion euro investment.

Saxony-Anhalt Minister President Reiner Haseloff said Monday that Scholz spoke by phone with him and Saxony Minister President Michael Kretschmer to express his strong support for the TSMC and Intel projects and pledged to do his best to bring them to fruition.

"We have faith in the chancellor's promises," Haseloff said.

Also on Monday, Habeck said he will try hard to find a solution to provide funding under the law to TSMC and Intel after he met with the heads of states in his country.

The two investment plans by TSMC and Intel have been perceived as a way for Habeck to push for the localization of chip production in Germany and forge a self-built semiconductor supply chain in Europe, according to the ministry.

Habeck said these investments are "the core of Germany's economy" and there is no doubt that they need to be realized.

For TSMC, the company is hoping to break ground on the fab in Dresden in the second half of 2024. Mass production would start at the end of 2027 and use the 12nm, 16nm, 22nm and 28nm processes to produce chips for automotive electronics and specialty industrial devices.

Part of TSMC's global expansion efforts, the plant will be the chipmaker's first chip foundry in Europe. It is also building two fabs in the U.S. state of Arizona and another one in Kumamoto, Japan.

(By Li Yu-li and Frances Huang)

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