Written by/ Ma Xiaolei Editor/ Zhang Nan Design/ Shi Yuchao Source/ Reuters
As demand for chips soars, a semiconductor shortage that has lasted for nearly two years has wreaked havoc across multiple industries around the world, including automotive, healthcare and communications.
In order to encourage semiconductor production, the European Union submitted the draft European Chips Act in February 2022, and after nearly a year of review and discussion, the European Parliament's Industry and Energy Committee voted to adopt the draft European Chips Act and the legislative report of the amendments on January 24, 2023 local time.
The bill would earmark €15 billion for public and private semiconductor projects by 2030. Together with research funding projects such as Horizon Europe and the Digital Europe Programme, as well as public funding from EU member states, more than €43 billion will be spent to support the bill by 2030.
At the same time, the EU hopes to increase its global semiconductor market share from the current 10% to 20% by 2030, thereby reducing its dependence on Asia and the United States.
In the past two years, due to the new crown epidemic, supply chain bottlenecks, the Russia-Ukraine conflict and other factors, it has become increasingly difficult for Europe to attract international chipmakers. Coupled with the subsidy restrictions of the Inflation Reduction Act (IRA) in the United States, European governments fear that the money they intended to invest in Europe will end up on the other side of the ocean.
To receive the IRA's tax credit, electric commercial vehicle startup Arrival decided to shift its focus from the UK market to the US. Swedish battery maker Northvolt is also considering delaying plans to build a factory in Heide, Germany, and may prioritize expansion in North America.
German Chancellor Olaf Scholz said: "The supply chain disruption during the pandemic has exposed Europe's excessive dependence on imported chips in recent years, and green subsidies in the United States remind us to consider how to improve local investment conditions." ”
Once the "European Chip Act" was proposed, in the face of the EU's temptation to throw money, many chip manufacturers announced plans to build factories in Europe.
The largest investment in Infineon's history
On February 16, 2023, Infineon announced that it has been approved to invest EUR 5 billion in a new plant for analog/mixed-signal technology and power semiconductors in Dresden, Germany.
Germany's Federal Ministry for Economic Affairs and Climate Action (BMWK) approved the early start of the project, allowing Infineon to start construction before the European Commission completes its review of legal subsidies. This indicates that the new factory is not far from construction.
Infineon said it will be the largest single investment in the company's history, with the new plant scheduled to start production in 2026 and expected to create around 1,000 jobs.
Infineon's project will reportedly receive funding from the European Chip Act. The company is seeking about 1 billion euros in public funding.
Infineon's investments drive a decarbonized and digitalized semiconductor manufacturing foundation. Jochen Hanebeck, CEO of the company, said that the new plant mainly sees structural growth in semiconductor market demand for renewable energy, data centers and vehicle electrification, and Infineon will continue to accelerate the expansion of production capacity to seize the growth opportunities brought by the trend of decarbonization and digitalization.
Analog/mixed-signal components can be used in power supply systems such as energy-efficient charging systems, small automotive motor control units, data centers, and IoT applications. The interaction of power semiconductors and analog/mixed-signal components creates highly energy-efficient and intelligent system solutions.
Intel asked for 10 billion euros in subsidies
In March 2022, chip giant Intel announced that it would invest more than 80 billion euros in Europe over the next decade to build at least two new semiconductor factories, and chose Magdeburg, Germany, as the construction site for the first new factory.
However, soaring energy and raw material prices disrupted Intel's plans. It is reported that the original cost budget of the new plant was 17 billion euros, and the cost is now close to 20 billion euros.
According to the original plan, the new plant will start breaking ground in the first half of 2023, with 6.8 billion euros of government assistance. At the end of 2022, it was reported that Intel had postponed the start date and asked for 10 billion euros in aid.
"The situation has changed a lot since the plans were announced." Benjamin Barteder, an Intel spokesman, said, "We can't give an exact date for construction at this time." Intel also added that it was in discussions with the government on how to close the funding gap.
In addition, Intel is in talks with Italy to build an advanced packaging and assembly plant to use new technology to stack tiles into complete chips. The new plant will reportedly cost billions of euros and the company is in talks with the Roman side to reach a final investment deal, most likely in the wealthier north.
ST expands production base
STMicroelectronics will invest €730 million to build a silicon carbide fab in Italy. The company said the new plant will meet the growing needs of automotive and industrial customers as they transition to electrification.
The new plant will be located at its Catania production site in eastern Sicily, adjacent to the existing silicon carbide equipment manufacturing plant, and create approximately 700 jobs.
The five-year investment, which will be completed in 2026, will be supported by 292.5 million euros of public funds in Italy, an allocation approved by the European Commission.
Margrethe Vestager, Executive Vice President of the European Commission, said in a statement: "The new factory in Italy will strengthen Europe's semiconductor supply chain and help us achieve our green and digital transformation. Ensure the industry has a reliable source of silicon carbide substrates to produce energy-efficient chips for use in electric vehicles and charging stations. ”
In July 2022, the company also announced plans to build a semiconductor factory in France in partnership with GlobalFoundries. The plant will be in close proximity to ST's existing plant in Crolles, France, and is aiming to reach full capacity by 2026.
TSMC and Germany are in deep negotiations
According to media reports, TSMC plans to build a new wafer foundry in Dresden, Germany, which is also TSMC's first production base in Europe.
TSMC will send a team of executives to Germany in early 2023 to discuss the level of local government support for its proposed factory and the ability of the local supply chain to meet its needs, according to people familiar with the matter.
People familiar with the matter also said that it is expected that soon after the visit, TSMC will make a final decision on whether to build a factory. If it is decided to build a factory, the factory may start construction as early as 2024, and will first engage in the research and development of 28nm chips.
TSMC is in talks with several material and equipment suppliers, focusing on whether suppliers also have the ability to make investments to support the construction of the plant.
The company revealed in 2021 that it was conducting a preliminary assessment of its expansion into Germany. The company said in a statement: "We are not ruling out any possibility, but there are no specific plans at this time. ”
Wolfspeed and ZF
Wolfspeed, a global leader in silicon carbide technology and manufacturing, said on February 1 that it will work with ZF to build a $3 billion electric vehicle chip factory and a research and development center in Saarland, Germany.
Wolfspeed's chief executive, Gregg Lowe, said the company expects to receive a 20 percent subsidy on the total amount invested. Following approval by the European Commission, plant construction is expected to start in the first half of 2023, with semiconductor production starting in 2027 and full production by 2030.
At that time, the plant will not only be Wolfspeed's first factory in Europe, but also the world's largest and most advanced silicon carbide 200mm (8-inch) silicon carbide device factory. The new plant will be close to ZF's largest plant and will employ more than 600 people when fully operational.
ZF will invest $185 million in the new plant, holding a minority stake, while Wolfspeed will retain all operational and administrative control of the new plant.
In addition to the plant, the two companies will build a groundbreaking and innovative silicon carbide development and manufacturing center in the EU, in which ZF will hold a majority stake.
Wolfspeed's business focuses on silicon carbide semiconductors. Compared with traditional silicon chips, silicon carbide technology is suitable for use in power chips, and is also classified as a third-generation semiconductor, and the use of silicon carbide chips helps save battery-related costs, increase the range of electric vehicles by 15%, and shorten charging time, so it is favored by electric vehicle manufacturers.
This article was originally produced by Automotive Business Review