US chipmaker Wolfspeed to open plant in Germany

Frankfurt, Germany, Feb 1 (AFP/APP):US chipmaker Wolfspeed said Wednesday it will open a plant in Germany to support the car industry’s shift to electric vehicles, as Europe seeks to reduce reliance on Asia and the United States.

The factory will be built in the western state of Saarland, and is part of Wolfspeed’s previously announced $6.5 billion expansion plan, the company said.

Chancellor Olaf Scholz, who travelled to Saarland for the announcement, said the plant would “make a significant contribution towards ensuring that our European industry is reliably supplied with semiconductors”.

Supply chain snarls during the pandemic had exposed how over-reliant Europe had become on chip imports from abroad in recent years, he said, disrupting numerous industries that depend on the components.

Wolfspeed said the plant would cost more than two billion euros and be the world’s biggest production facility for chips made out of silicon carbide, an alternative semiconductor material.

“This new facility will be crucial to supporting our expansion in a capacity-constrained industry that is growing very rapidly, especially across the EV (electric vehicle) marketplace,” said Gregg Lowe, president and CEO of Wolfspeed.

German parts-maker ZF Friedrichshafen said it intended to invest a “three-digit-million euro sum” in the new construction in return for a shareholding in Wolfspeed.

German auto titans like Volkswagen are accelerating efforts to shift towards producing high-tech electric cars, and away from polluting vehicles that run on fossil fuels.

The plant, Wolfspeed’s first in Europe, will be built over 35 acres (14 hectares) in Ensdorf on the site of a former coal-fired power plant.

The project is dependent on state aid approval from the European Commission. Construction of the plant is expected to begin in the first half of 2023, Wolfspeed said.

It will employ 600 people once fully operational.

– US subsidy fears –

The European Union last year launched a plan known as the “Chips Act”, which aims to double Europe’s market share in semiconductors by 2030.

Wednesday’s announcement is also a boost for Europe at a time of growing fears that companies could shift their operations to the United States because of the Inflation Reduction Act, which offers tax cuts for US-made electric cars and batteries.

Scholz said the US’s green subsidies were “an incentive for us Europeans to consider how we can keep improving investment conditions at home”.

“This includes making European rules on state aid even more agile and flexible,” he added.

Last year, German chipmaker Infineon unveiled plans for a new factory in the eastern German city of Dresden.

US tech giant Intel also said it would invest billions in a new manufacturing site in Magdeburg, also in eastern Germany.