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TSMC, Bosch, Infineon, and NXP Establish Joint Venture to Bring Advanced Semiconductor Manufacturing to Europe

Daniel Nenni

Daniel Nenni

Admin
Staff member
Hsinchu, Stuttgart, Munich, Eindhoven, Aug 8, 2023 – TSMC (TWSE: 2330, NYSE: TSM), Robert Bosch GmbH, Infineon Technologies AG (FSE: IFX / OTCQX: IFNNY), and NXP Semiconductors N.V. (NASDAQ: NXPI) today announced a plan to jointly invest in European Semiconductor Manufacturing Company (ESMC) GmbH, in Dresden, Germany to provide advanced semiconductor manufacturing services. ESMC marks a significant step towards construction of a 300mm fab to support the future capacity needs of the fast-growing automotive and industrial sectors, with the final investment decision pending confirmation of the level of public funding for this project. The project is planned under the framework of the European Chips Act.

The planned fab is expected to have a monthly production capacity of 40,000 300mm (12-inch) wafers on TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technology, further strengthening Europe’s semiconductor manufacturing ecosystem with advanced FinFET transistor technology and creating about 2,000 direct high-tech professional jobs. ESMC aims to begin construction of the fab in the second half of 2024 with production targeted to begin by the end of 2027.

The planned joint venture will be 70% owned by TSMC, with Bosch, Infineon, and NXP each holding 10% equity stake, subject to regulatory approvals and other conditions. Total investments are expected to exceed 10 billion euros consisting of equity injection, debt borrowing, and strong support from the European Union and German government. The fab will be operated by TSMC.

“This investment in Dresden demonstrates TSMC’s commitment to serving our customers’ strategic capacity and technology needs, and we are excited at this opportunity to deepen our long-standing partnership with Bosch, Infineon, and NXP,” said Dr. CC Wei, Chief Executive Officer of TSMC. “Europe is a highly promising place for semiconductor innovation, particularly in the automotive and industrial fields, and we look forward to bringing those innovations to life on our advanced silicon technology with the talent in Europe.”

Dr. Stefan Hartung, chairman of the Bosch board of management: “Semiconductors are not only a crucial success factor for Bosch. Their reliable availability is also of great importance for the success of the global automotive industry. Apart from continuously expanding our own manufacturing facilities, we further secure our supply chains as an automotive supplier through close cooperation with our partners. With TSMC, we are pleased to gain a global innovation leader to strengthen the semiconductor ecosystem in the direct vicinity of our semiconductor plant in Dresden.”

“Our joint investment is an important milestone to bolster the European semiconductor ecosystem. With this, Dresden is strengthening its position as one of the world’s most important semiconductor hubs that is already home to Infineon’s largest frontend site,” said Jochen Hanebeck, CEO of Infineon Technologies. “Infineon will use the new capacity to serve the growing demand particularly of its European customers, especially in automotive and IoT. The advanced capabilities will provide a basis for developing innovative technologies, products and solutions to address the global challenges of decarbonization and digitalisation.”

“NXP is very committed to strengthening innovation and supply chain resilience in Europe,” said Kurt Sievers, President and CEO of NXP Semiconductors. “We thank the European Union, Germany, and the Free State of Saxony for their recognition of the semiconductor industry’s critical role and for their true commitment to boost Europe’s chip ecosystem. The construction of this new and significant semiconductor foundry will add much needed innovation and capacity for the range of silicon required to supply the sharply increasing digitalization and electrification of the automotive and industrial sectors.”

TSMC Spokesperson​

Wendell Huang
Vice President & Chief Financial Officer
Tel:886-3-5055901

TSMC Deputy Spokesperson​

Nina Kao
Public Relations Division
Tel:886-3-5636688 Ext.7125036
 
Dresden Fab Ownership:
70% TSMC
10% Infineon
10% Bosch
10% NXP

I wonder how GF feels about this? Let's see if there is a skilled worker shortage. Are there unions in Dresden?
 
Daniel Nenni said:
Dresden Fab Ownership:
70% TSMC
10% Infineon
10% Bosch
10% NXP

I wonder how GF feels about this? Let's see if there is a skilled worker shortage. Are there unions in Dresden?
Click to expand...


“We have investments that will create between 5,000 and 8,000 additional jobs,” said Martin Dulig, Saxony’s economy minister. “Yet Germany faces an acute skills shortage and demographic decline. The number of working-age people will fall by 200,000 over the next 10 years.”"

www.ft.com

Worker shortages and far right threaten east Germany’s chip ambitions

Industry concerned rise of anti-immigration movements in state of Saxony will hinder efforts to attract foreign talent
www.ft.com www.ft.com
 
Daniel Nenni said:
The planned joint venture will be 70% owned by TSMC, with Bosch, Infineon, and NXP each holding 10% equity stake, subject to regulatory approvals and other conditions.
Click to expand...
Interesting business arrangement to form a joint with local power houses.

Considering the fact that they form JASM with Sony back to 2021, ESMC now, can they form a new partnership with Apple to build ASMC in US?

I see them not been able to adopt American business or political environment. At least in RAMP-C (and many other US-backed semiconductor programs), they aren't included. They didn't get much recognition as Intel's pursuing for more and more government subsidy.

I see Apple as the biggest partner for TSMC if TSMC intends to do so because Apple has deep pockets, and Apple need to diversify consider its scale. Also, by forming ASMC, Apple can benefit from being an IDM-like business structure (more vertically integrated, a model Intel is trying to become now). They have no reason to give up on an opportunity that they helped to create. If it isn't Apple being the first adopter of new process node from TSMC, others, like AMD, may not be able to beat Intel so badly in power efficiency and cost. So, Apple should get a fraction of the business if the technology were to generate years of return after it was introduced.

And if ASMC will be created, I see no reason to be bearish on Apple like I am now, and even less reason to be bullish on Intel because they will not have the same level of strong backing compared to now.

What an interesting time to live in!
 
delong.height said:
Interesting business arrangement to form a joint with local power houses.

Considering the fact that they form JASM with Sony back to 2021, ESMC now, can they form a new partnership with Apple to build ASMC in US?

I see them not been able to adopt American business or political environment. At least in RAMP-C (and many other US-backed semiconductor programs), they aren't included. They didn't get much recognition as Intel's pursuing for more and more government subsidy.

I see Apple as the biggest partner for TSMC if TSMC intends to do so because Apple has deep pockets, and Apple need to diversify consider its scale. Also, by forming ASMC, Apple can benefit from being an IDM-like business structure (more vertically integrated, a model Intel is trying to become now). They have no reason to give up on an opportunity that they helped to create. If it isn't Apple being the first adopter of new process node from TSMC, others, like AMD, may not be able to beat Intel so badly in power efficiency and cost. So, Apple should get a fraction of the business if the technology were to generate years of return after it was introduced.

And if ASMC will be created, I see no reason to be bearish on Apple like I am now, and even less reason to be bullish on Intel because they will not have the same level of strong backing compared to now.

What an interesting time to live in!
Click to expand...
ASMC is not going to be a thing. Apple has no appetite to stand up an extremely expensive fab arm. Such a thing would be extremely expensive and the possible benefits would be decades in the future. It makes no sense....
 
Mooredaddy said:
ASMC is not going to be a thing. Apple has no appetite to stand up an extremely expensive fab arm. Such a thing would be extremely expensive and the possible benefits would be decades in the future. It makes no sense....
Click to expand...
There may be a chance. Given the CHIPS act and chiplets that industry is pursuing, it can possibly generate more ROIC than repurchase share back at high prices.
 
Mooredaddy said:
ASMC is not going to be a thing. Apple has no appetite to stand up an extremely expensive fab arm. Such a thing would be extremely expensive and the possible benefits would be decades in the future. It makes no sense....
Click to expand...
I agree. I think the biggest challenge for any IDM is having a senior management team that is skilled in what it takes to design chips (and in Apple's case, consumer products containing those chips) and must also be expert in chip fabrication and manufacturing. In my experience at Intel these are nearly orthogonal skill sets. Yes, there are executives who dabble in both, but I can't think of even one case where they were really successful at having one foot in design and the other in manufacturing. The best case scenario was where the CEO had a trusted leader for the areas they weren't expert in, but based on my experience I can't point to a case I'd want to study closely. Corporations are too hierarchical for that sort of bicameral thinking. Some people might point to conglomerates like GE or Berkshire-Hathaway as models for running big companies requiring disparate leadership skillsets, but GE isn't an enduring example of success, and BK is more a holding company than a true conglomerate. I think Tim Cook knows Apple should stick to what they have leading leadership expertise for, and that chip manufacturing is as different from phones, computing, and software as building nuclear reactors would be.
 
blueone said:
I agree. I think the biggest challenge for any IDM is having a senior management team that is skilled in what it takes to design chips (and in Apple's case, consumer products containing those chips) and must also be expert in chip fabrication and manufacturing. In my experience at Intel these are nearly orthogonal skill sets. Yes, there are executives who dabble in both, but I can't think of even one case where they were really successful at having one foot in design and the other in manufacturing. The best case scenario was where the CEO had a trusted leader for the areas they weren't expert in, but based on my experience I can't point to a case I'd want to study closely. Corporations are too hierarchical for that sort of bicameral thinking. Some people might point to conglomerates like GE or Berkshire-Hathaway as models for running big companies requiring disparate leadership skillsets, but GE isn't an enduring example of success, and BK is more a holding company than a true conglomerate. I think Tim Cook knows Apple should stick to what they have leading leadership expertise for, and that chip manufacturing is as different from phones, computing, and software as building nuclear reactors would be.
Click to expand...
What I think will be different in the following years is that for Apple to re-shore some of the capacity outside Taiwan, the cost must justify the action to move the order outside of Taiwan. Having said that, I don't mean all or most of the capacity will be moved out as a result but some most cutting-edge.

As a result, it is possible for Apple for fund the ASMC while the fabs to be operated by TSMC. This approach is similiar to what we see at Intel's deal with Brookfield (but Brookfield isn't a fabless company, it is a investment company)
 
delong.height said:
As a result, it is possible for Apple for fund the ASMC while the fabs to be operated by TSMC. This approach is similar to what we see at Intel's deal with Brookfield (but Brookfield isn't a fabless company, it is a investment company)
Click to expand...
Apple could easily afford it financially, but I'm failing to see the real benefit to Apple or TSMC. If the manufacturing R&D is still in Taiwan, the geopolitical risk might be postponed a bit, but not really mitigated. I also don't see why TSMC would agree to this. Propping up what is really a competitor doesn't sound like a good deal for them. The Intel/Brookfield deal is clearly delineated. Brookfield provides investment funds, and Intel does the rest. There's no conflict of interest for either of them.
 
blueone said:
Propping up what is really a competitor doesn't sound like a good deal for them.
Click to expand...
Not really a competitor, I suggest it's more like a franchise business model. The fab is still operated by TSMC but funded by Apple.
blueone said:
There's no conflict of interest for either of them.
Click to expand...
Yes, may be some conflict of interest between the two.
blueone said:
the real benefit to Apple
Click to expand...
Diversified supply chain, higher ROIC compared to stock repurchase because of long tail effect on advance process technology.
 
cliff said:
Was Andy Grove only handling manufacturing?
Click to expand...
Andy Grove dabbled in computer engineering, but it wasn't helpful to Intel, IMO. Grove's main strategic theme late in his career was a strategy he called "peer to peer". Obviously, this is not how the industry evolved - cloud computing became the most important thrust of the century - and I think Intel was late to the cloud party from trying to make PCs the center of the computing universe. During Grove's time he also pushed ProShare, a peer-to-peer video conferencing capability, interestingly the project was led by Pat Gelsinger, which was a dud too. Don't get me wrong, Grove was one of the greatest US CEOs and Chairmen of the Board ever in an objective strategic sense, but he was a manufacturing expert who sometimes tried to be a computing visionary. His greatest strategic accomplishment, transitioning Intel's product lines from memory chips to CPUs, was not really a feat of computing strategy, but more of a financial decision due to competition from lower cost competitors. His successor, Craig Barrett, another brilliant guy, a materials science expert by training, but was also one of the fathers of Itanium. (Barrett's wife coined the Itanium name.) These are two examples of brilliant Intel leaders who didn't wildly succeed bridging the design and manufacturing expertise gap.
 
Last edited:
TSMC Dresden Fab.jpg
 
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