Germany Invests €20 Billion in Chip Production
The German government plans to allocate €20 billion to boost semiconductor production in the country. This move aims to strengthen the technological sector and ensure a stable supply of key components amid geopolitical instability, as reported by Bloomberg.
Approximately 75% of this funding will go to multinational corporations, including Intel and TSMC, although official confirmation of this information is yet to be provided. Intel will receive €10 billion to construct a factory near Magdeburg, representing a third of the total investment volume in the project. Additionally, negotiations are underway with TSMC regarding potential investments in a plant located in Dresden, where microcontrollers for German automakers are produced. The German government intends to invest around €5 billion in this factory, constituting half of the total investment amount.
Another €1 billion is earmarked to support Infineon, accounting for 20% of the investments in the new semiconductor plant in Dresden. Furthermore, it is expected that the German automotive supplier ZF Friedrichshafen AG and the American chip manufacturer Wolfspeed will also receive state financial support to establish a chip production plant in Saar. The joint venture is seeking subsidies amounting to approximately €750 million, covering approximately 25% of the project's costs.
Approximately €3 billion remains in the funding scheme for future projects. The assistance package is planned to be implemented by 2027. Interestingly, the funding comes from the Climate and Transformation Fund (KTF), initially created to finance the country's transition to a carbon-neutral economy. Germany's Minister of Economics, Robert Habeck, has proposed using the Economic Stabilization Fund to provide state aid to chip manufacturers.
In June, the Chairman of TSMC, Mark Liu, told journalists that the EU became more interested in establishing new microchip production facilities after the conflict in Ukraine, aiming to secure supplies.
Despite returning to fiscal constraints, Germany is subsidizing companies. The government plans significant budget cuts for the next year, including social payments. After substantial spending during the pandemic and the energy crisis associated with Russia's actions, Finance Minister Christian Lindner is determined to adhere to constitutional debt limits.