German technology group Bosch announced on Wednesday that it will invest 3 billion euros ($3.01 billion) in chip production by 2026. The company said it plans to open two new development centers in Germany and expand its insert manufacturing plant in Dresden. Bosch said its plan would boost its chip manufacturing capacity in Europe in a global market still dominated by US and Asian players. Thus, the company seeks to obtain funding from the European Union (EU) in the framework of major projects of common European interest.
The Covid-19 pandemic has fueled the chip shortage, and its long-term effects, including the spread of viruses, labor problems and geopolitical uncertainty, are fueling it. Chip shortages will continue into 2022, and every link in the global supply chain will continue to be severely disrupted. While some experts believe that the situation will improve this year, others are convinced that the crisis will continue into 2023. There are no signs of a short-term recovery, but Europe wants to speed things up by increasing investment in chip manufacturing infrastructure.
A lot will calm down in 2022, but there will still be bottlenecks in 2023. Individual industries may need fewer chips if demand falls due to a possible downturn, but you can’t build a strategy on that,” Bosch CEO Stefan Hartung said in The Interview. Earlier Wednesday, Bosch announced that it would invest 3 billion euros in chip manufacturing by 2026, the latest in a series of companies to benefit from European support for the industry to reduce electricity dependence on foreign suppliers.
Last year, Bosch opened a billion-euro chip manufacturing plant in Dresden, a record-breaking investment as the company sought to establish itself in a growing market for chips designed to power electric and self-driving cars amid global shortages. The group, which makes silicon carbide chips and microsensors for everything from cars to headphones, will spend 170 million euros on new development centers in Germany, in the cities of Reutlingen and Dresden, and 250 million euros to expand its wafer factory in Dresden.
On Wednesday, Bosch also announced that it will explore the possibility of manufacturing gallium nitride (GaN) chips, which will reduce power losses by four times compared to traditional silicon-based power chips. Indeed, while other chip makers such as Intel and TSMC plan to develop tiny 2nm chips, Bosch’s wafer factories are dedicated to 40nm to 200nm chips used in e-mobility. Europe can and should capitalize on its strengths in the semiconductor industry, Hartung said.
Bosch is committed to putting European needs first. The goal should be to produce chips for the specific needs of European industry. He added that this means not only chips of the lower limit of the nanometer scale. Bosch uses most of the chips it makes in its own products, but also relies on third-party sources. Our suppliers need to purposefully allocate their limited resources, and we need to do the same with our customers,” said Hartung. He added that it has not yet been decided how the remaining funds will be spent.
Bosch will apply for EU funding for Important Projects of Common European Interest (IPCEI). However, Bosch is not the only company actively investing in the semiconductor sector in Europe and Germany in particular. US hardware maker Intel announced this year a €33 billion investment in semiconductor manufacturing in six European countries. Intel said it will build a major €17 billion chip manufacturing plant in Magdeburg, Germany, and a research and development center in France.
In Italy, Intel plans to spend 4.5 billion euros on a chip assembly and packaging plant, and in Poland it will expand its presence in the laboratory. In Spain, the company will launch a joint lab with the Barcelona Supercomputing Center to study zetta-scale computing, and in Ireland, it plans to double its existing chip production with a €12 billion expansion. In an announcement posted on September 7, 2021 on its official website, Intel announced that it could invest up to $80 billion in Europe over the next decade in the long term.
The investment is part of a European chip law that will allow private companies and governments to work together to significantly improve Europe’s position in the semiconductor industry, according to Intel CEO Pat Gelsinger. Thus, Intel must use the 6.8 billion euros of funding under this law in the construction and commissioning of the plant in Magdeburg. The aid was announced by Martin Krber, member of the Bundestag for Magdeburg, in June, and funding for this year was confirmed in the federal budget statement.
In May, the Spanish government announced a €12.3 billion investment plan aimed at turning the country into a major microchip producer and reducing Spain’s and the EU’s dependence on foreign microchip suppliers. The Madrid announcement came when Prime Minister Pedro Sches was scheduled to meet technology executives at a World Economic Forum meeting in Davos, Switzerland, to explain the plan and seek new investment. The Spanish initiative is to be partly funded by the European Covid-19 recovery plan.
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The EU may find it difficult to finance the $48 billion chip law, as available funds have already been allocated to other projects.
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Spain is investing $12.3 billion in semiconductor and microchip manufacturing to become a benchmark in this strategic sector facing serious shortage problems.
The Intel MGA plant in Germany receives $6.8 billion in funding under the EU chip law, and there will be two chip factories in Magdeburg.
Intel announces a $33 billion semiconductor investment in six European countries, France will be its European headquarters for high performance computing and AI design capabilities.