ESMC starts Dresden fab project with €5 billion German aid approval
ESMC begins its Dresden factory project as Brussels approves €5 billion in German aid, with automotive and industrial wafer production planned at scale by 2029.
European Semiconductor Manufacturing Company (ESMC) began land preparation for its Dresden chip factory on 20.08.2024, as the European Commission approved €5 billion of German support for the project. The joint venture brings together Taiwan Semiconductor Manufacturing Company (TSMC), Bosch, Infineon and NXP to supply automotive and industrial customers in Europe.
European Commission President Ursula von der Leyen attended the groundbreaking in Saxony and announced the aid approval. The planned facility will add manufacturing capacity in Germany for chips used in vehicles and industrial equipment. The project forms part of Europe's effort to expand semiconductor production, described in the Euronews coverage of the announcement.
Manufacturing capacity and investment plans
TSMC expects total investment to exceed €10 billion, financed through equity, borrowing and public support. Its groundbreaking announcement set out a planned monthly capacity of 40,000 wafers when the factory is fully operational. The production programme covers two technology families:
- 28/22-nanometre planar CMOS processes.
- 16/12-nanometre FinFET processes.
- 300-millimetre wafers for both manufacturing families.
The company expects around 2,000 direct high-technology jobs. Its environmental plans include energy-efficient construction, water reclamation and pursuing LEED certification. Bosch management identified the site as adjacent to its existing Dresden wafer factory. TSMC described the ceremony as the start of land preparation, with construction expected later in 2024; it did not announce that commercial production had begun.
Access beyond the shareholders
ESMC will operate an open foundry: customers outside the shareholder group will also be able to order production. The Commission's approval records dedicated support for European small businesses and start-ups, alongside special production-capacity access for smaller companies and European universities. Full capacity is planned by 2029, at 480,000 silicon wafers annually. That figure measures wafers, rather than individual chips.
The Commission assessed the measure under Article 107(3)(c) of the Treaty on the Functioning of the European Union. It concluded that support was limited to a demonstrated funding gap and necessary to attract the investment. ESMC agreed to share potential profits above current expectations with Germany and to comply with crisis-related priority orders under the Chips Act. Applying for Open EU Foundry recognition is a commitment, rather than an approval already obtained.
A wider European production programme
The European Chips Act entered into force on 21.09.2023. Europe's stated ambition is to increase its global microchip-market share from about 10% to 20% by 2030. Von der Leyen put public and private investment commitments attracted by the programme at approximately €115 billion. The Dresden announcement adds a specific automotive and industrial manufacturing project to that broader policy effort, with its production and employment figures remaining forward-looking targets.
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