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On November 28, the German government unveiled plans to invest billions of euros in the semiconductor sector to help chipmakers advance production technologies beyond current standards.
The subsidies are estimated at around €2 billion ($2.11 billion), according to Bloomberg, citing two attendees of a funding event. Economic Ministry spokesperson Annika Einhorn told Reuters that the funding will be needs-based and in the “low single-digit billion range.”
The German government is preparing about €2 billion in chip subsidies for companies to develop “modern production capacities that significantly exceed the current state of the art,” Bloomberg reports, noting the move comes just months after Intel shelved plans for a €30 billion…
— Dan Nystedt (@dnystedt) November 29, 2024
The funds will support 10 to 15 projects in areas like raw wafer production and microchip assembly.
Earlier this month, the ministry invited chip companies to submit requests for subsidies to strengthen the microelectronics ecosystem in Germany and Europe as part of the European Chips Act. However, with Germany’s new government set to be chosen in February, unpredictability remains for applicants.
Challenges in Europe’s Semiconductor Sector
The European Chips Act, adopted in 2023, aims to reduce the EU’s reliance on Asian suppliers and increase its worldwide market share to 20% by 2030. Governments are investing in the chip industry to localize the production of crucial components, following pandemic-related challenges and the escalating US-China conflict over Taiwan, which threaten access to essential technology.
The first round of subsidies through the Act went to Intel and a partnership between Infineon and TSMC in Dresden.
In September, Intel unexpectedly paused its €30 billion ($32 billion) project in Magdeburg, which had received €10 billion in EU subsidies. ZF Friedrichshafen AG and Wolfspeed also canceled their chip venture in Germany. In contrast, TSMC began construction on a €10-billion factory in Dresden in August, its first in Europe, with plans for further expansion.
