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Taiwan’s largest semiconductor company is set to break ground on its first European factory, aiming to diversify production and reduce reliance on Taiwan as tensions with China escalate.

What’s the deal: Taiwan Semiconductor Manufacturing Company (TSMC) is investing nearly $11 billion in a new facility in Dresden, Germany, as part of a joint venture called European Semiconductor Manufacturing Company (ESMC), in which TSMC holds a 70% stake. The facility is set to begin operations in 2027, focusing on the production of advanced 12-nanometer automotive chips, with a planned monthly output of 40,000 units.

Why are they doing this?: TSMC is building a facility outside Taiwan to address growing concerns over the potential impact of a Chinese invasion. As the world’s leading semiconductor manufacturer, TSMC is vital to global tech supply chains. Defense officials and economists have previously warned that an invasion of Taiwan could severely impact the global economy, as most everyday products rely on semiconductors. To mitigate these risks, TSMC has been expanding its production facilities worldwide, including in the United States (Arizona).  

What a top exec previously said: In June, TSMC’s chairman revealed that he had considered relocating the majority of the company’s operations outside of Taiwan after major customers, including Apple, raised concerns. These customers expressed that relying heavily on a Taiwan-based semiconductor supplier posed significant business risks. The chairman acknowledged that “instability across the Taiwan Strait is indeed a consideration for the supply chain.” Still, he noted that it would be “nearly impossible” to completely move all production out of Taiwan.

Control of the market: TSMC dominates the global semiconductor market, controlling a substantial 61.7% of the market share, making it the largest producer of semiconductor chips worldwide. This significant lead positions TSMC far ahead of its nearest competitor, Samsung, which holds an 11% market share, according to data from Statista.