TLDR
- TSMC will open a new chip design center in Munich, Germany, during the third quarter of 2025
- The Munich facility will focus on automotive, industrial, AI, and IoT chip applications for European customers
- TSMC is already building a manufacturing plant in Dresden, Germany, with partners Infineon, NXP, and Robert Bosch
- The company is expanding globally with $100 billion in new U.S. facilities and operations in Japan and Germany
- TSMC expects AI-related chip revenue to grow 45% annually over the next five years, with overall revenue growth approaching 20%
Taiwan Semiconductor Manufacturing announced plans to open a chip design center in Munich, Germany, during the third quarter of 2025. The world’s largest contract chipmaker continues its aggressive global expansion strategy.
Paul de Bot, President of TSMC Europe, revealed the Munich Design Centre plans at the company’s 2025 Technology Symposium. The facility will support European customers in designing high-density, high-performance, and energy-efficient chips.
The Munich center will focus on applications in automotive, industrial, AI, and IoT sectors. This move strengthens TSMC’s presence in Europe’s growing semiconductor market.
TSMC is already building a manufacturing plant in Dresden, Germany, called European Semiconductor Manufacturing Company (ESMC). The facility is a joint venture with Infineon, NXP, and Robert Bosch.
The Dresden manufacturing plant represents TSMC’s first major European production facility. Combined with the Munich design center, these investments create a comprehensive European semiconductor ecosystem.
Strategic Global Expansion
TSMC’s European expansion is part of a broader strategy to diversify its geographic footprint. The company faces ongoing concerns about its heavy reliance on Taiwan-based operations.
The chipmaker has already committed $65 billion to U.S. facilities in Arizona. These facilities have sold out production capacity through 2027, demonstrating strong demand for locally-produced chips.
TSMC plans to deploy an additional $100 billion for more U.S. production capacity. The company is also building facilities in Japan as part of its global diversification strategy.
This geographic spread reduces risks related to potential trade tensions and geopolitical concerns. U.S. production capacity particularly helps avoid potential tariff issues.
The Arizona facility represents TSMC’s largest overseas investment to date. Production began earlier this year with advanced 4-nanometer and 3-nanometer processes.
Technology Leadership Drives Growth
TSMC maintains its technology edge with industry-leading 3-nanometer chips currently in production. The company plans to launch 2-nanometer chips in late 2025, followed by 1.6-nanometer chips in 2026.
These next-generation chips offer power consumption improvements over current technology. 2-nanometer chips provide 20% to 30% better power efficiency compared to 3-nanometer chips when configured at the same speed.
1.6-nanometer chips will deliver an additional 15% to 20% power improvement over 2-nanometer technology. Power efficiency is crucial for data center operators facing high electricity costs.
Companies may find upgrading to newer chip generations more cost-effective than running power-hungry older processors. This creates a strong upgrade cycle for TSMC’s advanced node production.
Management expects AI-related chip revenue to grow at a 45% compound annual growth rate over the next five years. Overall company revenue growth is projected to approach 20% annually.
A 20% revenue compound annual growth rate would increase TSMC’s revenue by nearly 150% over five years. Few companies can deliver such consistent growth rates.
TSMC’s neutral position in the semiconductor ecosystem makes it a beneficiary of multiple technology trends. The company manufactures chips for most major semiconductor companies across various sectors.
Despite projected strong growth, TSMC stock trades at just under 21 times forward earnings. This valuation is below the S&P 500’s approximately 22 times forward earnings multiple.
The Munich design center opening is scheduled for the third quarter of 2025, with TSMC continuing to expand its European operations through both design and manufacturing capabilities.
