The government is considering building a semiconductor cluster in Europe, specifically in the Czech Republic, to support Taiwan Semiconductor Manufacturing Co’s (TSMC) new fab in Dresden, Germany, and to help local companies explore new business opportunities there.
Europe wants to ensure the security of its semiconductor sector, but a lack of comprehensive supply chains there could pose significant risks to semiconductor clusters.
The Czech government is aggressively seeking to build its own semiconductor industry and showing strong interest in collaborating with Taiwanese companies. Executive Yuan Secretary-General Kung Ming-hsin (龔明鑫) on Friday said that Taiwan is optimistic about building a semiconductor cluster in the Czech Republic over the next three to five years. Following a visit to the country last month, Kung said he believes the Central European country can serve as a hub or a springboard for Taiwanese semiconductor companies seeking business opportunities in Europe.
He said some companies planned to set up offices in Prague later this year and run a logistics center next year in the city of Usti nad Labem, where the Czech government suggested Taiwan could build a semiconductor cluster.
About 20 local companies, including Topco Scientific Co, Gudeng Precision Industrial Co and Advanced Echem Materials Co, were represented in the delegation that Tung led to the nation, but none of them have affirmed the government’s call to support building a supply chain in Europe. They seem uncertain about investing in an unfamiliar territory amid shifts in the industry due to geopolitical risks.
Now that semiconductors are regarded as a strategic technology related to national security, the EU, the US and Japan are racing to build their own local supply chains by offering lucrative subsidies and tax incentives. TSMC and other Taiwanese semiconductor manufacturers have become the most sought-after investors, as they manufacture the most advanced chips used in Nvidia Corp’s artificial intelligence-related products, Apple Inc’s iPhones and Amazon.com’s data centers.
To satisfy its customers’ need to boost supply-chain resilience, TSMC is ushering in a new era of rapid global expansion and shifting away from its strategy of concentrating chip manufacturing in Asia and in Taiwan for its cutting-edge chips. The chipmaker is building advanced plants in Arizona; Kumamoto, Japan; and Dresden.
Although Europe is home to the major vehicle chip supplier NXP Semiconductor NV, Infineon Technologies AG, industrial chemical supplier Merck AG and ASML Holding NV, it lacks numerous key elements in the complicated process of semiconductor production, not to mention the differences in work culture compared with Taiwan and the outsize influence of labor unions on the continent.
It is a different story in Japan. Taiwanese semiconductor equipment, and packaging and testing service providers are following in the steps of TSMC there, as Japan plays a crucial role in supplying key chemicals, raw materials and equipment to major companies. A slew of Taiwanese suppliers of TSMC have set up new sites in Kyushu or are preparing to do so.
Gudeng, the sole supplier of extreme ultraviolet pods to TSMC, said it plans to build a new plant in Kurume, Japan, to start operations in the first quarter of 2026. ASE Technology Holding Co, the world’s biggest chip tester and packager, last month said it planned to buy 16 hectares of land in Kyushu for about NT$701 million (US$21.86 million) to build an advanced testing and packaging plant.
A similar work culture and a better supply chain are the key reasons that Taiwanese companies are apt to invest in Japan rather than the US and Europe. For the moment, creating a semiconductor cluster in Europe seems to be wishful thinking.
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