Bundeskartellamt clears acquisition of shares in new TSMC semiconductor factory in Dresden by Bosch, Infineon and NXP

The Bundeskartellamt has cleared plans by Bosch, Infineon and NXP to each acquire 10 per cent of the shares in European Semiconductor Manufacturing Company (ESMC), a company established by Taiwan Semiconductor Manufacturing Company (TSMC). ESMC intends to build and operate another large semiconductor factory in Dresden, in which the three European technology companies are also to be involved.

Andreas Mundt, President of the Bundeskartellamt: “Recent geopolitical upheavals have underlined the importance of secure access to semiconductors, especially also for the German industry. Both the European Union and Germany are therefore very committed to bringing more semiconductor manufacturers back to Europe and Germany. It is the Bundeskartellamt’s task to ensure that the requirements under competition law are complied with in this process. According to our examination, the fact that Bosch, Infineon and NXP will also have a share in the new TSMC semiconductor factory in Dresden is fully in line with the requirements under merger control. Our proceeding does not include an assessment under state aid law of the envisaged public funding for the company to settle in Dresden.”

TSMC is by far the largest company in the world which, as a pure contract manufacturer, transfers predefined chip designs to slices of semiconductor material (referred to as wafers). It is also one of the leading companies in this sector.

Bosch, Infineon and NXP are technology companies which widely use semiconductor chips in their products. For this purpose, they not only produce the chips themselves but also rely on contract manufacturers such as TSMC.

First, the Bundeskartellamt assessed the extent to which the participation of the three European companies in the factory to be built by ESMC was likely to prevent other customers from accessing the semiconductor chips that are also important for their business. Second, the Bundeskartellamt considered the extent to which other contract manufacturers of semiconductor chips were likely to no longer find enough customers for certain products as a result of the transaction. In its assessment, the authority focused on the manufacture of so-called micro controlling units (MCUs), which are used in many products and increasingly also in cars. Bosch, Infineon and NXP are major players in this field.

The Bundeskartellamt concluded that there was no cause for concern in this respect. The large factory of ESMC’s direct competitor Global Foundries is also located in Dresden, which means that there is another capable supplier providing Bosch, Infineon, NXP and their competitors with the semiconductor chips they need. At the same time, the participation gives the three companies only limited access to ESMC’s capacity and there are significantly more capacities available worldwide. These capacities are to be expanded considerably in Europe and worldwide. Since the semiconductor chips which can be manufactured in the factories of TSMC and its competitors can be used in a wide variety of products and demand for semiconductor chips is steadily growing, there was no reason to believe that it would become significantly more difficult to access customers using these chips in the foreseeable future.