Taiwanese semiconductor maker TSMC is considering building a plant in Germany to avoid future supply chain problems in the sector, an executive said on Tuesday, AFP reported.

Geopolitical tensions surrounding Taiwan, one of the world’s largest chipmakers through TSMC Group, are adding to supply concerns, even as the sector has faced shortages due to Covid-19 and excess demand in recent years.

Taiwan Semiconductor Manufacturing Company (TSMC), which plans to build a factory in Dresden, controls more than half of the world’s production of chips used in smartphones, cars and rockets, among others, with customers such as Apple.

“I don’t want to get into the political side of things, but I think it’s necessary to provide customers with a diversified source of supply,” TSMC Vice President Kevin Zhang said at a conference in the Netherlands.

We view Europe as a “very important” geographic area due to its large customer base. “I think that’s really the main factor,” Zhang said.

According to Zhang, TSMC is “currently undergoing due diligence” on proposals for a manufacturing plant in Dresden that will focus on the automotive industry.

According to him, the final decision can be made at the TSMC board meeting in August.

TSMC has plants in Taiwan, China and Japan, and another one is being built in the US state of Arizona.

TSMC Chairman Mark Liu warned in an interview with CNN in August that an invasion of the island would lead to “inoperability” of the group’s facilities.

A global shortage of chips during the pandemic has heightened concerns, and TSMC has come under pressure from Western powers to build more factories abroad. (Photo: Michael Wee, Dreamstime.com)