The German government will invest billions in the semiconductor sector in a bid to boost the country’s global competitiveness and reduce dependence on China and the US.
Berlin revealed that it plans to invest approximately €2 billion in the form of subsidies. This is expected to help semiconductor companies significantly upgrade their current production facilities. Earlier this month, the German Ministry of Economic Affairs asked companies to submit their applications for funding. However, the exact amount has yet to be determined. This is likely to be decided after the country’s next elections, which will be held in February 2025, reports Euronews.
The move follows Intel’s recent suspension of plans to invest around €30 billion in a semiconductor plant that was to be located in Magdeburg. This is a major blow for Germany. Other companies, such as ZF Friedrichshafen AG and Wolfspeed Inc, have also shelved plans to manufacture chips in the country. It has also received subsidies worth around €10 billion under the European Chip Act 2023. However, the company has decided to postpone those plans as it tries to cope with mounting losses and declining sales.
Semiconductors are used in a variety of devices including cameras, mobile phones, microprocessors, satellites, military equipment and automobiles.
Over the past few years, Germany, along with several other major European economies, has invested heavily in its domestic semiconductor industry in an attempt to rapidly increase production of high-tech products.
This is expected to contribute significantly to Germany’s global competitiveness, as well as reducing dependence on countries such as the US and China. This has become particularly important following the supply chain blockages seen during the Covid-19 pandemic.
Escalating trade and geopolitical tensions between China and the US, most notably over Taiwan, have also contributed to this pressing need for key European countries to develop their own semiconductor and artificial intelligence industries. This is mainly due to the growing concerns that China is using advanced technology for military and espionage applications.
In support of this, acts such as the European Chip Act have been created, which works to improve the EU semiconductor industry as a whole. The aim is to increase Europe’s share of the global semiconductor market to 20% by the end of the decade. | BGNES
