After Intel’s investment in 2021, Germany will host a new factory for maker of semiconductors by 2024. The American company Wolfspeed and the German automotive supplier ZF have announcement on February 1, join forces to build a factory. The budget is estimated at 3 billion euros and will be located in the west of the country. The plant will produce silicon carbide chips for electric vehicles.
Wolfspeed hopes to get 25% subsidies
This new plant will be located on the site – in the process of being approved by the European Union – of a disused coal plant in the western region-German of the Saarland. A first building will be dedicated to the manufacture of silicon carbide chips. A second will be a joint laboratory for the two companies. It will be used to advance silicon carbide devices and systems in mobility, electric cars, and industrial and energy applications. The construction site should begin in the second half of 2023 and its commissioning could take place at the end of 2024.
Of the estimated 3 billion euros, Wolfspeed is expected to invest more than 2 billion in the project. The company hopes that 20% to 25% of the total investment cost will come from subsidies from the European Union and the German state. For its part, ZF should contribute 10% of the construction costs. The auto parts manufacturer also wants to set up a research and development center in Germany.
Holger Klein, director of ZF, said the new plant, which will employ 600 people when fully operational, ” offered a chance to stabilize supply chains and accelerate the ecological transition for the industry. The location could give a boost to the Saar region. In recent years, it has been deeply affected by the exodus of car manufacturers to factories specializing in zero-emission vehicles. Last month, Ford announced plans to sell its plant in the German region.
Last December, Gregg Lowe, Managing Director of Wolfspeed explained that“ by the end of the decade, power semiconductors – specifically those made of silicon carbide – could experience a compound annual growth rate of 14% “. The American company faces stiff competition in Europe with STMicroelectronics, Infineon Technologies and Bosch.
A decisive investment for the European Union
For the German Chancellor Olaf Scholz, present on the site during the announcement, ” this initiative proves that companies looking to make sustainable investments should look no further than Europe “.
This statement comes in response to the US Inflation Reduction Act. This piece of legislation signed by Joe Biden last summer aims to promote investment in green energy and industrial relocation. Only companies located at Uncle Sam’s will be able to benefit from the subsidies, provoking the fear of European leaders of a mass exodus. Following the Chancellor’s speech, Anke Rehlinger, Minister President of Saarland, said that the European Union ” can win the competition and reverse the trend.
For two years, the number of companies, specialized in chips, wanting to settle in the European Union has increased. Intel has invested 17 billion euros, in December 2021, for a gigantic new factory in the German city of Magdeburg. STMicroelectronics announced in October 2022 to open a production unit in Italy. Last December, one of the world leaders in the semiconductor sector entered into negotiations to set up one of its factories in the city of Dresden in Germany.
The strategy of the European Union to encourage a considerable increase in European chip production in order to reduce the vulnerability of its supply chains and to limit its dependence on Asia and the United States seems to carry its fruits.
