Several key partners just announced plans to build the European Semiconductor Manufacturing Company (ESMC) GmbH – a joined venture between TSMC, Robert Bosch, Infineon Technologies and NXP Semiconductors. TSMC will hold a 70% stake, the other three will have 10% each.

ESMC will begin construction of a fab in the second half of next year and plans to begin mass production of chips in 2027. Before you get too excited, note that this fab will focus on older nodes.

The target is to produce 40,000 300mm (12”) wafers per month using TSMC’s 28/22nm planar CMOS process and the 16/12nm FinFET process. Both of these are a decade old at this point, but the fab won’t be building smartphone chipsets or GPUs.

Bosch, Infineon and NXP are major players in automotive hardware market (the first two are from Germany, the latter is based in the Netherlands). These older nodes are well-suited for the dozens and dozens of microcontrollers that go into a modern car. Additionally, Infineon makes memory for embedded systems, that’s a use case as well. A few years ago TSMC build a dedicated 28nm fab for Sony image sensors too (and modern cars have several cameras on board).

There are other products that can be made at these nodes, for example, Samsung announced the start of production of 12nm DDR5 RAM earlier this year, though while it is cutting edge now, it will be fairly old by 2027.

Again, this is clearly a move meant to bolster EU’s automotive and industrial sectors rather than trying to enter new markets that need cutting edge silicon. But if you paid attention to the car market over the last few years, you will remember the havoc that the chip shortage wreaked on the industry. With a secure domestic supply, local manufacturers will be in a better position when another shortage inevitably hits.

The total investment in the project is over €10 billion. It will create around 2,000 jobs for high-tech professionals, the fab will be operated by TSMC.

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