According to a new Bloomberg report, the German government plans to allocate 20 billion euros to enhance the country’s semiconductor production capacity. This initiative aims to strengthen the domestic science and technology industry, at the same time in the context of geopolitical turmoil, to ensure a stable supply of key components.
According to Bloomberg, these funds, about 75% will be used to fund Intel, TSMC and other companies to build chip manufacturing plants in Germany.
Half of the funds, or 10 billion euros, have been allocated to Intel for the construction of a new production site near Magdeburg in eastern Germany, the report said. The German government is also finalizing negotiations with TSMC for the latter to invest in a plant in Dresden to produce a variety of microcontrollers needed by German automakers. The German government is expected to subsidize 50% of the project, or about €5 billion.
In addition, about €1 billion will be used to support Germany’s own semiconductor giant Infineon in building a new chip factory in Dresden, with a subsidy of 20 percent of the total investment. In addition, German auto parts supplier ZF Friedrichshafen AG and U.S. chipmaker Wolfspeed are also expected to receive government funding to build a silicon carbide chip plant in Saarland, near the French border. The joint venture seeks to receive a cost subsidy of about 25%, equivalent to €750 million.
The funding program will be in place until 2027, and it is interesting to note that these funds come from the Climate and Transition Fund, which was originally set up to finance Germany’s transition to a carbon-neutral economy, but the government has since expanded its investments to cover sustainable economic projects. Previously, German Economy Minister Robert Habeck had proposed using the Economic Stabilization Fund to provide state aid to chipmakers.
At present, the German government has not confirmed or denied its plan. If the news is true, then Germany will become Europe’s most active to chip makers to provide subsidies to the country.
