The additional fabs would be in Dresden, Germany and in Japan’s Kumamoto district. In both locations TSMC has made agreements with local authorities and is in talks with local customers, said a report by Digitimes.

In Germany, the plant would provide 16nm/12nm processing to satisfy the needs of such companies as NXP Semiconductor, Infineon Technologies and On Semiconductor, the report added. These have more focus on automotive chip production, which has been a key shortage.

This is quite different from the discussions around a leading edge 5nm or 3nm fab, although by the time any fab is built and qualified in two to three years there will be demand for automotive parts built on the 5nm process node.

The discussions could also involve a European semiconductor industry consortium that the European Union has been keen to put together that could involve such companiesas NXP, Infineon, STMicroelectronics, Dialog Semiconductor, AMS and ASML

eeNews Europe approached TSMC but a spokesperson said the company was unable to provide a comment because it was in its “official quiet period” ahead of announcing financial results.

The possibility of more overseas wafer fabs would represent a change of heart by the foundry giant that has always prefered to keep its manufacturing focused on a few campus sites in Taiwan. In the past it has made exceptions in the US and China and is now coming under increasing pressure to do so again.

Until recently TSMC said it had no plans to manufacture chips in Europe and the company appeared to have persuaded Japan that rather than provide front-end wafer fab it was prepared to engage on back-end packaging, particular as chiplet style assembly of components was becoming a key activity.

Next: Chip shortages

But as chip shortages have put numerous equipment and automobile companies around the world on short-time working, governments have been forced to re-assess the strategic nature of securing chip supplies. While the US found persuading TSMC to build an additional leading-edge 5nm wafer fab complex there relatively easy, Europe and Japan have found progress much harder.

There are also two different goals. One is to help Europe and Japan get closer to the leading-edge on semiconductor manufacturing for low-volume needs in high-performance computing and the second is to supply the diverse range of products based on processes behind the trailing edge at larger volumes. Politicians have expressed the need to pursue the leading-edge for reasons of strategy while local chip companies either don’t need such production or have long ago gone fabless for that portion of their production.

Intel, which is itself struggling to manufacture chips at the leading-edge, is known to be in negotiations with European and German authorities about building a wafer fab near Munich.

The Taiwan government has also made statements about supporting the European automotive sector but has done so while linking it to recognition. The European Union does not recognize the existence of Taiwan. The People’s Republic of China considers Taiwan to be a renegade state that it plans to re-assimilate at a time of its own choosing.

A mix of the move by Intel and the possibility of large financial support and political pressure may have been enough to persuade TSMC that if it can build wafer fabs at very low cost to itself, using tax payers’ money and that of the local customers, then it should. This is a model being pursued by Globalfoundries which is planning for expansion in Dresden. 

No timescale was provided for TSMC’s build outs in the report, which would likely take two years if started from scratch. Obtaining automotive approval for production, which would likely be part of the application base of the fabs in both Europe and Japan, could add many months to the time when first chips come into production.

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