“Only worth it if…”
Economists raise concerns about TSMC billions
08/09/2023 03:55 am
The chip manufacturer TSMC is building a plant in Dresden – the five billion euros in subsidies promised by the federal government are also decisive for the location decision. Not all economists agree that the money is well spent.
The planned subsidy for the Taiwanese chip manufacturer TSMC is viewed critically by some economists. The President of the RWI Leibniz Institute for Economic Research, Christoph Schmidt, is skeptical that the German economy will get the hoped-for boost from the funding. It is doubtful that the subsidy will bring the country more in the long term “than if you put the same funds into research and development, for example storage technologies or into the infrastructure for importing and transporting hydrogen,” said Schmidt of the “Rheinische Post”. .
The President of the German Institute for Economic Research (DIW), Marcel Fratzscher, sees “an uncertain bet on the future” in the planned Intel chip factories in Magdeburg and TSMC in Dresden. The state spends 15 billion euros in subsidies for these two factories alone. “This will only pay off economically if these two investments give an impetus to the entire regional economy and innovations and new jobs are also created in other sectors and with suppliers,” Fratzscher told the “Tagesspiegel”.
Subsidies are not enough
Referring to the locations, Fratzscher said the projects could help eastern Germany “develop its own economic model and differentiate itself from other regions of Germany.” However, for this to happen, a culture of welcome, better infrastructure and more investment in education and innovation would have to be created. This is the only way to attract skilled workers and make the investments successful.
TSMC announced on Tuesday that it would build a semiconductor plant in Dresden by 2027. The group therefore expects that the total investment will exceed ten billion euros. Half of this sum is expected to be raised as a subsidy from the German state. Federal Chancellor Olaf Scholz spoke of the fact that Germany would now “probably develop into the largest location for semiconductor production in Europe”. The Saxon Prime Minister Michael Kretschmer rated the settlement as a great benefit. The investment ensures “more European sovereignty and technological independence in a key sector,” said the CDU politician.