Germany offering 14 billion euros to entice local chip manufacturing

• On top of the 15 billion euros announced by the EU under the European Chips Act, Germany will pump in an additional 14 billion to support its country’s chip manufacturing and supply 

In February this year, the European Union (EU) announced a European Chips Act that will enable 15 billion euros in additional public and private investments until 2030. The amount earmarked is meant to spur local chip manufacturing–an attempt by the bloc to avert more supply chain disruptions and ultimately become less dependent on foreign firms. Adding to that, Germany announced that it will also be pumping in 14 billion euros to attract chip makers into its country particularly.

The European Chips Act, among others, is intended to cater to the bloc’s need for more advanced production facilities, which according to European Commission President Ursula von der Leyen, comes with a huge upfront cost. “We are therefore adapting our state aid rules, of course under strict conditions. This will allow – for the first time – public support for European ‘first of a kind’ production facilities. And as they are ‘first of a kind’, they benefit all of Europe.”

Von der Leyen also highlighted that “no country – and even no continent – can be entirely self-sufficient. This is impossible”. To that she said, Europe will always work to keep global markets open and to keep them connected. “What we need to tackle are the bottlenecks that slow down our growth, as we are just experiencing it right now. And therefore, Europe will build partnerships on chips with like-minded partners, for example the US or for example Japan. It is about balanced interdependencies and it is about reliability.”

Moving in that direction, Germany’s Economy Minister Robert Habeck announced this week that his government wants to attract chip makers with 14 billion euros in support, since the lack of semiconductors used in everything from smartphones to cars was a massive problem for the country. “We must develop our own strategy to secure primary materials,” he said, according to Reuters.

Two months ago, after the European Chips Act were announced, Intel announced their plans to build a chip manufacturing plant in Germany as part of the company’s investment of up to 80 billion euros in Europe over the next decade. For Germany, it would be a leading-edge semiconductor fab megasite but elsewhere in Europe, there would be a new R&D and design hub in France, as well as investment in R&D, manufacturing, and foundry services in Ireland, Italy, Poland, and Spain.

The Germany megasite will house Intel’s two first-of-their-kind semiconductor fabs and construction is expected to begin in the first half of 2023. Production is planned to come online in 2027, pending European Commission approval. The new fabs are expected to deliver chips using Intel’s most advanced, Angstrom-era transistor technologies, serving the needs of both foundry customers and Intel for Europe and globally as part of the company’s IDM (integrated device manufacturer) 2.0 strategy.