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Wolfspeed and ZF are planning a modern chip factory in Saarland


The chancellor is coming, as is the economics minister: This cannot be an ordinary factory settlement that has now been announced in Ensdorf near Saarlouis. It's about future technology - and about high subsidies.

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Politicians pose with records: Holger Klein, head of ZF, Saarland Prime Minister Anke Rehlinger, Federal Chancellor Olaf Scholz and Wolfspeed CEO Gregg Lowe


First Intel in Magdeburg, now Wolfspeed in the Saarland town of Ensdorf: Germany is attracting another chip factory with massive government funding.

The US group Wolfspeed wants to build a plant there for the equivalent of 2.75 billion euros.

The catch: A large part of the investment must be financed through subsidies, said Wolfspeed boss Gregg Lowe at the official announcement in Ensdorf near Saarlouis.

»Without this support, the project could not be realized in Europe.«

Federal Chancellor Olaf Scholz (SPD), who had traveled there specifically, described the factory as a contribution to greater security of supply for Europe with semiconductors.

Federal Economics Minister Robert Habeck (Greens) spoke of an important signal "that Germany is still attractive in a difficult situation, also for high technology."

The factory is to be built on the site of a former coal-fired power plant and will create 600 jobs.

The federal and state governments are ready to provide significant grants through the EU funding framework IPCEI and have already requested approval in Brussels, said a person familiar with the process.

"The green light from the EU Commission is still pending." But the release is certain.

Starting in 2027, silicon carbide semiconductors are to be manufactured, which could be used to increase the range of electric cars.

They are also used in energy and industrial plants.

World's largest production plant for such components

The automotive supplier ZF Friedrichshafen is involved with know-how and a financial contribution of around 170 million euros.

According to the companies, it will be the world's most modern and largest production facility for these components.

Wolfspeed and ZF also want to set up a research center at another location to further develop the high-performance chips.

"These initiatives are an important step on the way to a successful industrial transformation," explained ZF boss Holger Klein.

Like the entire industry, Germany's second-largest automotive supplier and traditional transmission manufacturer is in the midst of a transition to electromobility.

The wide range of applications for the chips also opened up new business opportunities for ZF.

After checking a number of possible locations in Europe, Wolfspeed decided on Germany because of the qualified workforce.

According to Lowe, the company hopes that this will result in particularly profitable production.

"The level of quality and training of technicians in Germany is very, very high," he said.

"Our job is only to train them for semiconductor machines, and we have four years to do that." Wolfspeed expects funding of around 20 percent of the total investment costs, Lowe told the "Handelsblatt".

Investment as a lure

The European Union (EU) aims to reduce Europe's dependence on Asia for semiconductors.

The lack of chips during the corona pandemic made the industry aware of the vulnerability of global supply chains.

The automotive industry struggled with massive production losses, and despite high demand, car sales in Europe fell to their lowest level in almost 30 years.

With a "European Chips Act" with a total volume of 45 billion public and private investments, the global production share of semiconductors in Europe is to be doubled to 20 percent within ten years.

The chip factory in Saarland will therefore be a further building block for securing supply chains for the automotive and electronics industry after the semiconductor production of the US group Intel planned in Magdeburg.

The German heavyweights Bosch and Infineon are also investing billions in chip factories in Dresden with government support.

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The stuff of business dreams: A silicon carbide wafer.

Something similar is soon to be mass-produced in Ensdorf.


German industry has been warning ever louder about competitive disadvantages compared to the USA since US President Joe Biden last year announced the "Inflation Reduction Act", a 370 billion dollar funding program for climate-friendly technology.

The German Association of the Automotive Industry (VDA) fears a spiral of protectionism.

"The transatlantic partnership must be deepened instead of being provided with hurdles," explained VDA President Hildegard Müller.

Europe's answer to the IRA is the Green Deal Industrial Plan.

The package of measures that EU Commission President Ursula von der Leyen presented in Brussels on Wednesday is intended to accelerate the economy's path to CO2 neutrality.

Scholz welcomed the proposals.

From the point of view of the federal government, the chip factory in Saarland is also against this background a counterpoint in the transatlantic location competition.

"There are currently concerns that the US will withdraw investments from Europe with its Inflation Reduction Act - and now we are showing that an American company wants to invest in Germany," government circles said.

Wolfspeed is a specialist in silicon carbide technology.

Founded in 1987, the company developed the first blue light-emitting diode.

Wolfspeed now has around 3,500 employees worldwide.


Source: spiegel

All business articles on 2023-02-01

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