TAIPEI (Taiwan News) — Contract chipmaker GlobalFoundries said it is opposed to Germany’s plan to subsidize a new Taiwan Semiconductor Manufacturing Co. (TSMC) plant in Dresden.

According to German paper Handelsblatt, GlobalFoundries said the proposed €5 billion (NT$172 billion) subsidy would further bolster TSMC’s leading market position. The plan has led to legal concerns, lobbying, and a possible formal complaint by GlobalFoundries to the EU commission, per Handelsblatt.

TSMC’s board on Aug. 8 approved a plan for a joint-venture with Bosch, Infineon Technologies, and NXP Semiconductors to build a fab in Dresden that will make 12/16 nm and 22/28 nm chips for the automotive and industrial sectors. The plant is expected to cost over €10 billion, while TSMC will provide an equity investment of no more than €3.49 billion.

GlobalFoundries, which has a facility near Dresden, is asking the German government for support similar to that proposed for TSMC, according to Tom’s Hardware. GlobalFoundries Chief Legal Officer Saam Azar said TSMC’s Dresden plant will produce chips that directly compete with those made by GlobalFoundries, in addition to working with the company’s three biggest customers: Bosch, Infineon, and NXP Semiconductors, according to Handelsblatt.

GlobalFoundries has registered its concerns with the EU Commission. Meanwhile, Azar said that a formal complaint might also be filed after the German government and TSMC register the project with Brussels, according to Tom’s Hardware.

Construction for the TSMC Dresden fab is expected to start in the second half of 2024, with commercial production slated to begin by the end of 2027.