Taiwan Semiconductor Manufacturing Company Considers Partnership with Bosch for European Chip Factory

Taiwan Semiconductor Manufacturing Company (TSMC) has recently announced that it will slow down its expansion plans in Taiwan, while continuing with its plans to build new factories in the United States and Japan. Facing pressure from major countries, TSMC recognizes the need to contribute to Europe and has sent teams to Europe for consultations. A few months ago, TSMC completed a site survey in Europe.

Semiconductor equipment companies have been inviting TSMC to set up factories in India and Singapore, while Germany has been urging TSMC to revise its partnership conditions and expedite its progress. The latest news is that supply chain partners have received shipment assessment notifications, and the joint venture model has been established. The main partner for the new factory in Europe will be Bosch, a German automotive parts supplier. TSMC has stated that the European factory plan is still under evaluation.

In the past, TSMC has primarily built overseas factories as wholly-owned subsidiaries while keeping research and development and main production bases in Taiwan. However, due to the rapid rise of geopolitical risks in recent years and the pressure from various parties, TSMC has had to change course and adopt new strategies.

According to TSMC's latest plans, the new factory in Japan will primarily be for Apple, and it will adopt a joint venture model with Sony and Denso, a car component manufacturer and TSMC's third-largest shareholder. The process technology has also been expanded from the originally planned 22/28 nanometers to 12/16 nanometers, with a target production capacity of 55,000 wafers per month by the end of 2024.

After establishing the new factories in the United States and Japan, TSMC's next expansion location will be in Dresden, Germany, where it has been invited by the European Union. TSMC has also stated that the new factory in Germany may be a special wafer plant for car use. The joint venture with Bosch for the 12-inch new factory will primarily focus on the 28-nanometer special process for cars, but it is still in the preliminary stages. If Bosch or other partners can promise to take on many responsibilities such as manpower, unions, and production efficiency risks, TSMC will wait for the overall economy and semiconductor industry to rebound before launching its factory construction plans.

With the new overseas production capacity set to start producing significant volumes in late 2024, the proportion of Taiwan's production capacity will also be significantly adjusted. TSMC has clearly stated that depending on customer demand and government support levels, the overseas production capacity of 28 nanometers and below may reach 20% or more of TSMC's total production capacity of 28 nanometers and below in five years or longer. Bosch is the world's largest automotive parts supplier and has already established 6-inch, 8-inch, and 12-inch wafer plants. In June 2021, the car chip-focused wafer plant in Dresden started production, with a total investment of €1 billion. Bosch plans to invest €3 billion in the semiconductor business by 2026.