Taipei, Dec. 6 (CNA) Taiwan’s Economic Minister Wang Mei-hua (王美花) tried to ease concerns Wednesday over the future of a Taiwan Semiconductor Manufacturing Co. (TSMC) plan to build a foundry in Germany, saying the German government was working to solve a funding problem.

Germany had promised 5 billion euros (US$5.40 billion) in subsidies to TSMC in support of a plan to build a 10-billion-euro semiconductor fab in Dresden through a joint venture, but a ruling by Germany’s Federal Constitutional Court has jeopardized that funding.

“The German government has publicly explained that it will solve the funding problem,” Wang said on the sidelines of a ceremony celebrating the formation of a 5G alliance in Taiwan.

Wang said the Ministry of Economic Affairs (MOEA) has stayed in close contact with TSMC and would provide any assistance possible, though she did not elaborate on what Taiwan’s government could contribute to the situation.

Asked if the project could fall through because of the funding shortfall, Wang said it was first necessary to confirm whether TSMC’s investment plan has actually been affected by the current budget woes faced by the German government.

In an article on Tuesday, the Financial Times cited a source close to TSMC as saying that if the German government were to cut its subsidy commitment, the chipmaker might have to renegotiate the terms of its Dresden fab.

“Worst case is that if it turns out nine months from now that there will be no subsidies, we will have to cancel the project,” the source said.

In late November, German Chancellor Olaf Scholz expressed his strong support for investment projects by TSMC and Intel Corp, which is also planning to invest in Magdeburg in the state of Saxony-Anhalt, and pledged to do his best to bring those projects to fruition.

The uncertainty emerged after Germany’s Federal Constitutional Court ruled on Nov. 15 that the German government’s decision to reallocate 60 billion euros of unused funding from pandemic support measures to its Climate and Transformation Fund in 2022 was unconstitutional.

The subsidies pledged to the TSMC and Intel projects were to have come from those 60 billion euros, leaving Scholz’s government scrambling to find other funding sources in Germany’s tight budget.

Germany’s commitment to Intel was for 9.9 billion euros in subsidies on an investment of 30 billion euros.

TSMC announced in August its plan to set up a joint venture to build a semiconductor fab in Dresden in the state of Saxony .

It would hold a 70 percent stake in the joint venture, called European Semiconductor Manufacturing Co., with investment partners Bosch, Infineon Technologies and NXP Semiconductors expected to each hold a 10 percent stake.

TSMC has said previously that it is hoping to break ground on the fab in Dresden in the second half of 2024.

Mass production would start at the end of 2027 and use the 12nm, 16nm, 22nm and 28nm processes to produce chips for automotive electronics and specialty industrial devices, according to the company.