Taiwan Semiconductor Manufacturing Co (TSMC) announced on August 8 that its board of directors had approved a 3.5 billion euro (US$3.8 billion) investment in the construction of its first European factory in Germany.

TSMC, the world's largest contract chipmaker, has been in talks with the German state of Saxony since 2021 about establishing a fabrication plant, or "fab", in Dresden.

In a brief statement following a board meeting, the company said it had approved an investment of up to 3.499 billion euros in a TSMC-majority-owned subsidiary in Germany, European Semiconductor Manufacturing Company (ESMC) GmbH, to provide foundry services.

The European Union has approved the EU Chips Act, a 43 billion euro subsidy plan to double its chipmaking capacity by 2030, in a bid to catch up with Asia and the United States.

TSMC is one of several chipmakers, including Intel and Wolfspeed, seeking to draw on government funding to build factories in Europe. Brussels and EU member states are promoting domestic production by offering billions in state subsidies in order to reduce reliance on Asian suppliers and alleviate a global chip shortage that has caused havoc for automakers.

The EU aims to double its global market share to 20% by 2030. TSMC is also investing $40 billion in a new plant in Arizona, a western US state, to support Washington's plans for more domestic chip manufacturing.

In a statement issued following the board meeting, TSMC stated that it had also approved a capital injection of up to US$4.5 billion for the Arizona plant as part of the overall US$40 billion investment.