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TSMC's global strategy: New plants in Europe, US, and Japan to boost focus on AI & geopolitical diversification

Taiwan Semiconductor Manufacturing Co., the world's biggest independent chipmaker, is on its path to further expansion in Europe. With this move, TSMC plans to open new plants for chips focused on the developing demand for artificial intelligence and other latest technologies. This is part of its overall strategy to take its operations to other parts of the globe while relying less on its base in Taiwan.

In an interview with Bloomberg, Wu Cheng-wen, Taiwan’s National Science and Technology Council Minister, said, “They have started construction of the first fab in Dresden, they are already planning the next few fabs in the future for different market sectors as well.”

TSMC, the world's largest contract chipmaker, has already pumped billions into facilities around the world, from the United States and Japan to Europe, aimed at managing the growing risks of geopolitical tensions between Taiwan and China.

In August 2024, TSMC started building its €10 billion ($10.9 billion) semiconductor fabrication plant in the eastern German city of Dresden, the first factory within the European Union. The company expects to have roughly half of the project's costs covered by state subsidies and aims to start production in late 2027.

During the Bloomberg interview, Wu emphasized that AI chips, particularly for clients like Nvidia Corp. and Advanced Micro Devices Inc. (AMD), will drive demand in this sector. He said, “The AI market, including chips for US-based Nvidia Corp. and Advanced Micro Devices Inc., will be the most important segment.”

Although Wu did not provide a definitive timeline for TSMC’s future expansion in Europe, he mentioned that the company is considering additional fabs for the European market. “Maybe they can work on the European market as well, so TSMC is looking for that for planning their next few fabs,” he said.

This expansion in Dresden also opens opportunities for the region like the Czech Republic, which has deepened ties with Taiwan. According to Wu, Taiwanese government support for investing in its local TSMC suppliers in the Czech Republic will be considered as a developing collaboration between the two countries.

TSMC is continuing its expansion of its US operations: over $65 billion will be invested in three plants in Arizona. According to a statement from Wu Cheng-wen, “Short term, maybe it’s painful for Taiwanese companies because it’s more expensive if they move over there. But in the long run, maybe it’s good for them, from my point of view, because they can improve themselves.”