TSMC’s plans to build a chip factory in Germany are becoming more concrete again. Another important talking point is on the table: money.

TSMC has had plans for a number of years to set up a chip factory on European soil. Last fall, a delegation from the Taiwanese chip giant traveled to Germany to select a location. Reuters reports that construction of the plant can now begin. TSMC is negotiating with the federal government about how much subsidy Germany wants to contribute.

This can still be a tricky point, just ask Intel. Intel would initially receive $6.8 billion from the federal government to finance the construction of the chip factory in Magdeburg. After the estimated cost was higher than expected, the chipmaker is asking for more subsidies and is refusing to start building until Germany (and Europe) gets more money.

It is not known how many billion euros it is for TSMC. The Taiwanese company’s factory would be built in the eastern German city of Dresden. Negotiations are said to be at an “advanced stage,” a well-placed source confirmed to Reuters.

Important for Europe

The arrival of TSMC (and Intel) is of inestimable economic, technological and strategic importance for the European Union. With the EU chip law, the EU intends to bring thirty percent of global chip production onto its own territory in order to be less dependent on Asian and American factories. The subsidies that TSMC and Intel are aiming for therefore come partly from European coffers.

However, we recently learned that the funding for the project went horribly wrong. Europe is far from meeting the proposed €43 billion budget; Member States are struggling to agree on an amount of EUR 3.3 billion. It is therefore questionable whether the financial needs of TSMC to start building the factory can be met.

TSMC also invests heavily in overseas locations. In addition to the possible plant in Germany, locations in the USA and Japan are also being examined. As a Taiwanese company with a crucial role in the global chip industry, TSMC steps on geopolitical ice. Therefore, in order not to get caught up in the battle between China and the United States, TSMC chooses to partially source the production from the home country.