Taiwan Semiconductor Manufcaturing Co (TSMC) has announced it will be spending $3.8bn (€3.45bn) on a new factory in Germany – marking its first plant in Europe. 

It comes as the continent pushes for a stronger domestic supply chain, backed by the recent passing of the European Chips Act which aims to double its chipmaking capacity within the decade. 

Taiwan-based TSMC is the largest semiconductor maker in the world, currently holding over 56% of the global market share in the industry.

German officials have confirmed they will be contributing up to $5bn to the factory, which will be built in Dresden. 

Robert Habeck, economy minister in Germany, said: “There is going to be a real ecosystem for semiconductor manufacturing in Germany.

 “It’s going to generate orders for the whole sector: for machine builders, for optics manufacturers, for skilled workers.”

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As well as Germany, TSMC also plans to invest $40bn in a new plant in the US state of Arizona, as the US also joins the push for stronger semiconductor manufacturing on its own soil.

In July, TSMC recorded a revenue fall of 10% compared to numbers last year. Overall, the company’s second quarter earnings have seen a 23% decline. 

TSMC is the world’s largest chipmaker and ranked eighth overall on GlobalData’s 2023 Q1 thematic scorecard for semiconductor manufacturers.