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New Chip Factory Could Overhaul Europe’s Semiconductor Push, German Carmakers Rejoice

Europe has been pushing hard for an increase in local semiconductor production, especially as most carmakers on the continent have long been relying on the Asian supply chain exclusively.
Wolfspeed wants its plan to start production in four years 6 photos
Photo: Wolfspeed
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This is one of the reasons European carmakers have been hit hard by the lack of chips, especially as Asian semiconductor manufacturers ended up being flooded with orders overnight.

Just like the U.S., Europe is trying to change this. The European Chips Act is encouraging semiconductor production on the continent by providing funding and subsidies for expanded capacity and new factories, with an ambitious goal of doubling the market share in the chip industry from 10 percent to 20 percent by the end of the decade.

Wolfspeed is one of the latest names that are planning to set up a new production facility in Europe, with a recent report revealing that the plant will be located in southwest Saarland, Germany. The company will invest over 2 billion Euros ($2.1 billion) for the production of silicon carbide, a compound of silicon and carbon, that would be used for the manufacturing of chips aimed at electric cars.

While the production facility is projected to start building chips in four years, it’s not difficult to see who is going to benefit from the upgraded supply chain.

Mercedes, Volkswagen, and BMW will most likely be among Wolfspeed’s biggest customers, especially as German carmakers are also investing aggressively in zero-emission vehicles.

With silicon carbide chips, an electric vehicle should provide a substantially improved range. This is possible thanks to a mix of lower operating temperatures and reduced energy consumption, with Wolfspeed also promising reduced charging times, therefore addressing one of the biggest shortcomings of electric cars.

Earlier this month, Intel CEO Patrick Gelsinger warned that investing in expanded production should be a top priority for both Europe and the United States. The Intel chief executive emphasized that the heavy reliance on Asian chip production power fueled the semiconductor crisis, revealing that the U.S. and Europe currently control just 20 percent of the global production capacity.

The trends have changed substantially as compared to the production stats recorded three decades ago, Gelsinger said. At that point, Europe and the U.S. accounted for 80 percent of the chip output.

Last year, Intel released a worrying forecast for the car industry: the chip crisis would continue to impact vehicle production until at least 2024 despite all the investments in an improved capacity. One of the main reasons was the time needed to build new factories and set up new production lines, as most companies that are trying to accelerate their output wouldn’t be able to do so faster than three or four years.

Just like Wolfspeed, Intel is investing in new plants both in the U.S. and Europe, as its long-term plan is to become one of the leading names in the semiconductor business.
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About the author: Bogdan Popa
Bogdan Popa profile photo

Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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