Three construction projects worth more than 16 billion euros are running simultaneously in Dresden's chip cluster, reshaping Europe's response to semiconductor dependency. Infineon opened its Smart Power Fab on July 2nd, GlobalFoundries is expanding its facility for 1.1 billion euros, and TSMC's European joint venture ESMC is building a factory exceeding 10 billion euros. Together, they demonstrate where Europe's semiconductor ambitions now rest.
Three facilities, ten billion euros, one location
The Infineon opening is one of three massive construction sites in northern Dresden. GlobalFoundries is expanding its facility for 1.1 billion euros, with new manufacturing equipment beginning installation in the second half of 2026 and completion targeted for end of 2028. Capacity is expected to rise from 990,000 to 1.1 million wafer starts per year.
ESMC, the European Semiconductor Manufacturing Company, is a joint venture between TSMC (70 percent), Bosch, Infineon and NXP Semiconductors (10 percent each). With planned investment exceeding 10 billion euros, including 5 billion in German federal funds, ESMC represents Saxony's largest single corporate investment since reunification. Construction began August 2024, with production targeted for end of 2027.
What Smart Power Fab actually produces
Infineon's Smart Power Fab does not manufacture chips that make headlines for computing power. It produces power semiconductors: components that switch, convert and regulate electrons rather than process information. They appear in solar inverters and wind turbines, electric vehicle drive systems, and industrial motor controls. Every major artificial intelligence data center requires thousands of these chips to manage power efficiently.
This is no niche market. Europe leads globally in power semiconductors: Infineon, STMicroelectronics and ON Semiconductor dominate the segment. German Digital Minister Karsten Wildberger called the investment a "statement for a strong digital Germany at the heart of Europe." Chancellor Friedrich Merz, who appeared by video rather than in person, called it a "strong signal for Germany's and Europe's industrial competitiveness."
Chips Act 2.0: Exit from the premium tier
On June 3rd, 2026, the European Commission drafted Chips Act 2.0. The document represents an implicit retreat from its 2023 ambitions. That year, the EU set a target of 20 percent global market share in chip manufacturing by 2030. Silicon Saxony's industry association had already labeled this as "utopian" in 2024.
Chips Act 2.0 abandons that goal. State-of-the-art logic chip factories in direct competition with TSMC or Samsung are no longer stated policy. Instead, the Commission targets chip design capacity and gaps in the supply chain: specialty materials, manufacturing equipment and advanced packaging. Demand stimulus comes through building large AI data centers in Europe that prefer European chips. Silicon Saxony welcomes the course correction but warns, "The substance must now come from Berlin." Where funding for new projects will come from remains unclear.
The gap that Dresden's projects cannot close
ESMC, the largest of the three Dresden projects, will manufacture chips at 28/22 and 16/12 nanometer technology nodes. TSMC's most advanced lines in Taiwan already operate at 2 to 3 nanometers. For automotive semiconductors and industrial chips, this represents no disadvantage: airbag controllers, electric motor regulators and sensors require no atomic precision. For AI accelerators running large language models and image processing systems, this precision is essential.
University of Dresden Professor Gerhard Fettweis and Silicon Saxony's Frank Bösenberg raised this point directly in June 2026. Embedding artificial intelligence in robots, exoskeletons or vehicles that function locally without constant cloud connection requires chips manufactured at the most advanced nodes. Fettweis stated precisely: Europe will need a new world-class chip factory for AI and robotics. The existing and planned Dresden capacity does not meet this requirement.
Until ESMC produces: Two open billion-euro questions
ESMC starts production in late 2027, GlobalFoundries completes its expansion in late 2028. Two questions remain unanswered before then. First: who finances the next investment round? The first Chips Act promised 43 billion euros but much did not arrive as planned. Silicon Saxony demands Berlin close the gap before Brussels proposes a consistent concept. Second: will Europe build its own manufacturing capacity for AI chips? The required technology—EUV lithography and processes below 3 nanometers—is scarce in Europe. ASML in the Netherlands manufactures the lithography equipment but produces no chips itself. A decision of this magnitude would exceed the entire Dresden initiative many times over. By end of 2027, it will be clear whether Europe considers this step seriously or commits to its proven niche advantage in power semiconductors and automotive chips.