The German government is set to invest billions into its semiconductor industry, aiming to bolster production capacity just two months after Intel Corp. postponed plans for a €30 billion chip factory in Magdeburg. New funding is being allocated to chip companies to develop “modern production capacities that significantly exceed the current state of the art,” according to Annika Einhorn from the German economic ministry. While the total amount of subsidies is anticipated to be around €2 billion, exact figures remain uncertain as this information was shared by attendees of a confidential event.
A spokesperson for the ministry confirmed that the subsidies would be in the “low single-digit billion euro range.” Earlier this month, the economic ministry announced a call for chip manufacturers to apply for these new funds, but the final amounts are still being determined due to upcoming political changes. Germany is preparing for a new government election in February, which may influence the budget and thus create uncertainty for companies seeking subsidies.
Globally, governments are increasingly investing in semiconductor manufacturing to localize production, aiming to mitigate disruptions caused by the pandemic and geopolitical tensions, particularly between the U.S. and China. The European Chips Act, which was passed in 2023, focuses on strengthening the EU's semiconductor sector and aims to increase its market share to 20% of global production by 2030.
Germany's semiconductor industry has recently faced challenges, notably with Intel's planned factory, which was expected to be the largest project supported by the EU's Chips Act and receive €10 billion in funding. Additionally, both Wolfspeed Inc. and ZF Friedrichshafen AG withdrew from a joint chips venture planned for western Germany. In previous rounds of funding under the European Chips Act, financial support was granted to Intel and a collaboration between Infineon and TSMC in Dresden.
The German economic ministry intends to use the newly available funds to support 10 to 15 projects across various sectors, including the production of raw wafers and microchip assembly. Einhorn emphasized that these funded initiatives should strengthen and sustain the microelectronics ecosystem in Germany and Europe.
