Taiwan Semiconductor Manufacturing Co (TSMC) said on Tuesday that its board had approved a 3.5 billion euro ($3.8 billion) investment for the construction of its first European factory, in Germany.

The world’s largest contract chipmaker, TSMC has been in talks with the German state of Saxony since 2021 about building a fabrication plant, or "fab", in Dresden.

The company, in a brief statement after a board meeting, said it had approved the investment of up to 3.499 billion euros in a TSMC-majority-owned subsidiary, European Semiconductor Manufacturing Company (ESMC) GmbH, in Germany to provide foundry services.

The European Union has approved the EU Chips Act, a 43 billion euro subsidy plan to double its chipmaking capacity by 2030, in a bid to catch up with Asia and the United States.

TSMC is one of several chipmakers, including Intel and Wolfspeed, seeking to draw on government funding to build factories in Europe.

Brussels and EU member states are pushing for home-grown production by offering billions in state subsidies to cut dependency on Asian suppliers and ease a global chip shortage which created havoc for carmakers.

The bloc seeks to double its global market share to 20 percent in 2030.

TSMC is also investing $40 billion in a new plant in the western U.S. state of Arizona, supporting Washington’s plans for more chipmaking at home.

TSMC said in its statement after the board meeting that it had also approved a capital injection of not more than $4.5 billion for the Arizona plant as part of the overall $40 billion investment.

($1 = 0.9122 euros)