TSMC and the German government have reached an agreement that will see the semiconductor company establish its first Europe-based factory.

According to Reuters, TSMC has committed to spending 3.5 billion euros ($3.8 billion) to build a factory in Dresden, Saxony’s capital. The German government has committed up to 5 billion euros.

“Germany is now probably becoming the major location for semiconductor production in Europe,” said German Chancellor Olaf Scholz.

“That is important for the resilience of production structures around the world, but it is also important for the future viability of our European continent, and it is of course particularly important for the future viability of Germany.”

Germany is quickly becoming a major player in the semiconductor market, with Intel recently investing $33 billion to expand its manufacturing presence in the country.

“There is going to be a real ecosystem for semiconductor manufacturing in Germany,” said Economy Minister Robert Habeck. “It’s going to generate orders for the whole sector: for machine builders, for optics manufacturers, for skilled workers.”