Wolfspeed, following Intel, changed its mind about building a chip factory in Germany

Intel Corporation was not the only American chip manufacturer that decided to abandon the construction of plants in Germany. The Financial Times said that Wolfspeed also abandoned plans to build a €3 billion facility in Ensdorf, Bavaria, where it intended to produce silicon carbide chips, which are in demand in the production of electric vehicles.

Image source: Wolfspeed

An official statement from Wolfspeed states that the company made the decision given the more modest growth in electric vehicle sales than initially expected. Formally, plans to build a plant in Germany have been suspended indefinitely. For the government of Olaf Scholz, the Wolfspeed and Intel projects were key in trying to demonstrate the attractiveness of the German economy for the production of semiconductor products in the country. According to representatives of the opposition party, this only proves the inconsistency of the economic policy of the Scholz administration.

Let us recall that a couple of years ago the European Union expected to increase its share in the global market of semiconductor products from less than 10 to 20% by 2030. The development of the local semiconductor industry was intended to reduce dependence on Asian suppliers and create alternative supply chains, the need for which was demonstrated by the pandemic. However, TSMC’s plans to build a joint venture with Bosch, NXP and Infineon to produce chips worth a total of 10 billion euros remain in effect. Half of this amount should be covered by subsidies from the German authorities.

Wolfspeed was going to build its enterprise in Bavaria together with the German manufacturer of automotive components ZF. The latter was supposed to contribute 170 million euros to the project budget, another 512 million euros would cover subsidies from authorities at various levels. Based on the current level of demand for components for electric vehicles, Wolfspeed hopes to cover the market needs through its American operations. In addition to the limited pace of development of the electric vehicle market, Wolfspeed’s decision was also influenced by automakers’ slower adoption of silicon carbide components in their electric powertrains. German authorities continue to hope that Wolfspeed will return to the local project at a later date.