TSMC begins construction on first European plant

Taiwanese semiconductor giant TSMC broke ground on its first European factory in the eastern German city of Dresden as the EU looks to shift key supply chains onto the continent.

German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen attended the ceremony on Tuesday to mark the beginning of construction work along with TSMC's top brass, with von der Leyen hailing it as "an endorsement for Europe as a global innovation powerhouse".

Semiconductors have become indispensable in an array of industries, from electronics to wind turbines and even missiles.

TSMC is investing some 3.5 billion euros ($3.9 billion) in the Dresden project and will own 70 percent of the capital, with Dutch chipmaker NXP, Germany's Infineon and Bosch owning 10 percent each.

Taiwan is home to a powerhouse semiconductor industry –– largely thanks to TSMC's dominance.

But the supply chain is highly vulnerable to shocks and what von der Leyen referred to as "growing geopolitical tensions".

A major concern that has emerged in recent years is over Taiwan's neighbour, China, which claims the self-ruled island as part of its territory and has ramped up rhetoric about "unification".

As a result, TSMC has come under pressure to widen its operations by opening factories in other parts of the world.

Meanwhile, western countries have been redoubling efforts to bring semiconductor production closer to home.

The Dresden facility will be specialised in the production of semiconductors for Germany's flagship automotive industry, currently in the throes of transitioning to electric vehicle production.