GlobalFoundries "German Government Opposes TSMC Subsidies... Concerns Over Market Distortion"

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The German government has entered subsidy negotiations with Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturing) company, while GlobalFoundries, a U.S. foundry company, has publicly criticized the subsidy payments, sparking controversy both inside and outside Germany. Critics argue that if TSMC dominates the semiconductor supply market for the German automotive industry based on subsidies, fair competition will collapse and the market could be distorted.

Thomas Caulfield, CEO of GlobalFoundries (Photo by GlobalFoundries)

On the 24th (local time), Thomas Caulfield, CEO of GlobalFoundries, expressed opposition to the German government providing subsidies to TSMC in an interview with a British economic media outlet. Caulfield pointed out, "If a single company with market dominance disproportionately benefits from subsidies, it leads to dependence on a single supplier, market blockage, and a lack of supply chain resilience." He emphasized, "It is important to ensure that all government investments promote healthy competition and do not carelessly distort the market."

Caulfield's remarks came amid subsidy negotiations between TSMC and the German government. According to Bloomberg, TSMC is considering building a new semiconductor factory in Dresden, with the German government expected to provide subsidies amounting to about half of the total investment, approximately 5 billion euros (around 7 trillion won).

Foreign media noted, "The news that TSMC will land in Germany has already raised concerns among competitors, mainly GlobalFoundries, which are already operating in Germany," and viewed that the two companies could compete in the semiconductor market supplying Germany's automotive industry.

GlobalFoundries has a large semiconductor factory in Dresden. It was established in 2009 when the foundry division of the U.S. semiconductor company AMD was sold. Before spinning off in 1996, AMD had built and operated a foundry factory in Dresden. Last year, amid the semiconductor supremacy competition, GlobalFoundries coordinated with the local government to expand its German factory.

Robert Habeck, German Minister for Economic Affairs (second from left), and Annalena Baerbock, German Minister for Foreign Affairs (third from left), are having a conversation inside the cleanroom of the German semiconductor company Infineon’s factory.
[Image source=EPA Yonhap News]

In this situation, as news emerged that the German government would soon attract TSMC's factory with massive subsidies, Caulfield is interpreted to have actively voiced concerns fearing being outcompeted.

Germany has recently been very proactive in semiconductor investments. As a core industrial base in Europe, Germany appears to be leading the European Union's (EU) semiconductor self-reliance efforts. The EU has set a goal to increase its share of the global semiconductor market to 20% by 2030.

The German government is reportedly planning to support the semiconductor manufacturing sector with 20 billion euros. According to a recent Bloomberg report citing sources, the support funds will be distributed to German and foreign companies by 2027 and will come from a fund known as KTF.

Previously, the German government agreed to provide 9.9 billion euros to a new Intel factory to be built in the Magdeburg region. This accounts for about one-third of the total facility investment. When Intel expressed dissatisfaction due to rising energy and construction costs, the German government increased the originally planned subsidy from 6.8 billion euros to 9.9 billion euros.

This content was produced with the assistance of AI translation services.