TSMC board to vote Tuesday to build German factory-Handelsblatt

BERLIN (Reuters) -Taiwanese semiconductor manufacturer TSMC's board of directors on Tuesday will decide in favour of building a factory in the German city of Dresden, the Handelsblatt daily reported, citing government sources in Germany.

The German government will provide 5 billion euros ($5.49 billion) to support the construction of the factory, Handelsblatt's report said on Monday.

The German economy ministry declined to comment on the report, as did the government of the eastern state of Saxony, where Dresden is located.

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

TSMC declined to comment on the report.

It will operate the factory in a joint venture with partners Bosch, Infineon and NXP, the sources told Handelsblatt.

Infineon, Bosch and NXP declined to comment.

After the board gives the green light, TSMC could sign a letter of intent with Berlin on the funding, with the final decision to be made by the European Commission, the report said.

Germany plans to invest around 20 billion euros in the semiconductor industry in the coming years, one of several European governments that wants to lower dependency on Asian countries and build capacity in the region by offering subsidies through the EU Chips Act.

The EU has been courting Taiwan as the island faces increased diplomatic and military pressure from China, raising concerns about the fate of the factories that dot its western coast and produce the majority of the world's most advanced chips.

Intel recently announced it will spend more than 30 billion euros to develop two chip-making plants in Magdeburg, Germany's biggest ever foreign investment, and will get subsidies worth nearly 10 billion euros from the country.

Infineon is also building a 5-billion-euro semiconductor plant in Dresden, due to start production in 2026, while GlobalFoundries, which has been in Germany for decades, has been expanding its capacity in Dresden.

($1 = 0.9108 euros)

(Writing by Miranda Murray, additional reporting by Ben Blanchard in Taipei; Editing by Friederike Heine and Susan Fenton)