FILE PHOTO: A logo of Taiwanese chip giant TSMC can be seen in Tainan, Taiwan, Dec. 29, 2022.REUTERS/Ann Wang/File Photo
TAIPEI (Reuters) - Taiwan chipmaker TSMC is feeling "good" about talks towards setting up its first European factory in Germany, where it is in subsidy discussions with the government, the company's chairman said on Tuesday.
The world's largest contract chipmaker, TSMC has been in talks with the German state of Saxony since 2021 about building a fabrication plant, or "fab," in Dresden.
The European Union has approved the EU Chips Act, a 43 billion euro ($46.07 billion) subsidy plan to double its chipmaking capacity by 2030, in a bid to catch up with Asia and the United States.
Chairman Mark Liu told an annual meeting of shareholders that Taiwan Semiconductor Manufacturing Co had sent executives to Germany a few times for talks on the possible new plant.
"So far the feeling is good," he said, adding that some "gaps" in the supply chain and labour in Germany were being tackled.
"We are still negotiating with Germany on subsidies, how much the subsidies will be, that there won't be conditions for the support," Liu said. "Germany is discussing this in detail."
TSMC is one of several chipmakers, including Intel and Wolfspeed, seeking to draw on government funding to build a factories in Europe.
Brussels and EU member states are pushing for home-grown production by offering billions in state subsidies to cut dependency on Asian suppliers and ease a global chip shortage which created havoc for carmakers.
The bloc seeks to double its global market share to 20% in 2030.
Later Liu told reporters TSMC had hoped to invest fully in the German plant, but would allow small stakes in it to some customers if they wanted them, Taiwan media said.
TSMC does not expect to decide whether to proceed before August at the earliest, an executive said last month.
TSMC is also investing $40 billion in a new plant in the western U.S. state of Arizona, supporting Washington's plans for more chipmaking at home, but has expressed concerns about the criteria for U.S. semiconductor subsidies.
South Korean chipmakers have also raised concerns over the conditions, which include sharing excess profits with the U.S. government. Industry sources have said the application process itself could expose confidential corporate strategy.
Liu said the U.S. Department of Commerce (DOC) had an "open" attitude towards the subsidy conditions, adding that TSMC had last month submitted a "pre-application" and would keep up "positive communication" with the United States.
The DOC has said it will protect confidential business information, adding that the requirement to share excess profits would only occur when projects significantly exceeded projected cash flow.
The company was also considering a second plant in Japan's Kumamoto prefecture to accompany one it is now building there, Liu told media after the meeting.
($1=0.9333 euros)
(Reporting by Faith Hung and Ben Blanchard; Editing by Jamie Freed and Clarence Fernandez)
