Another semiconductor mega-project for Germany. On February 1, the American Wolfspeed announced with great fanfare that it wanted to open in this country the largest factory in the world of silicon carbide semiconductors, a central component for the electrification of cars.
In association with the German automotive supplier ZF, Wolfspeed could invest 2.5 billion euros on the site – figures not made official – and hire a thousand people there.
This future mega-factory will be located in the small town of Ensdorf, in the Saarland, a region bordering France, on the site of a former power station. Present at the announcement, Chancellor Olaf Scholz welcomed this project which “will make an important contribution to the security of supply of German and European industry”.
A European strategy
Because this mega-factory is part of a European strategy aimed at developing the semiconductor industry on the continent and gaining autonomy from Asia. With its “EU Chips Act” program, just finalized, Brussels wants 20% of the world’s semiconductors to be produced on site by 2030. As part of an important project of common European interest ( Piec), Wolfspeed’s future factory is set to receive massive subsidies.
If Germany is far from being the only one to benefit from these incentives to invest – the French STMicroelectronics and the American GlobalFoundries announced a joint project near Grenoble last summer – it is at the forefront in terms of mega-projects.
The German Bosch is expanding its plant in Reutlingen, its Munich competitor Infineon will invest 5 billion euros in a new production site in Dresden and last year, the American Intel set its sights on Magdeburg, in Saxony-Anhalt , for a record investment estimated at 17 billion euros.
Another American, GlobalFoundries, should put an extra billion on the table to develop its Dresden site. A city where the Taiwanese TSMC would also consider an investment.
Dresden with Grenoble
A glaring feature of these projects is that they are almost all concentrated in eastern Germany and more particularly near Dresden where the microelectronics industry developed during the communist regime of the GDR. From now on, this city of Saxony answers to the nickname of “Silicon Saxony”, produces a third of the semiconductors made in Europe and intends to continue on this path.
“To invest, companies are above all looking for a place with specialized companies, factories, research centers and universities. Dresden is with Grenoble one of the few cities that offers this in Europe, observes Joachim Ragnitz, from the IFO business center in Dresden. The semiconductor industry is also very energy intensive. However, eastern Germany produces a lot of it, especially green, from wind and solar. It is a central factor. »
Public subsidies play a central role
The establishment of such mega-factories should however be expensive for taxpayers. Last year, the Bundestag approved a new €12 billion package of subsidies for semiconductors. The prospect of receiving public subsidies also plays a central role for investors who openly acknowledge this.
Thus, in Magdeburg, the American Intel would still try to raise the stakes, as relayed by the local media for a few days. If the government confirmed to put 6.8 billion euros on the table in this project, Intel would have asked for 10 billion in order to confirm its investment.
This one-upmanship could also be strengthened as competition intensifies between the European Union and the United States, with the American announcement of a 400 billion dollar investment project for the climate and health ( Inflation Reduction Act). In Magdeburg, there are fears that Intel will abandon its German projects in favor of the United States.