Germany to invest €20B in chip production subsidies

According to Bloomberg, Germany plans to allocate €20 billion from its €177.5 billion Climate and Transformation Fund budget over the next four years to support chip production. Intel is set to receive €10 billion for its €20 billion two fab site in Magdeburg. TSMC is expected to receive €5 billion for a €10 billion fab in Dresden, which is still under negotiation. Infineon will receive €1 billion for a €5 billion fab in Dresden. ZF (Zahnradfabrik Friedrichshafen) Group and Wolfspeed are currently in negotiations to secure approximately €750 million for a €3 billion SiC chip plant Saarland.

This leaves around €3 billion that could potentially be allocated to Bosch and GloFo, both of which have fab sites in Dresden. The Climate and Transformation Fund was established in July 2022 to support the decarbonization of the German economy but has since been expanded to cover other areas that may face budget cuts by Finance Minister Christian Lindner.

The €10 billion allocation to Intel's two fab site in Magdeburg underscores Germany's efforts to attract major players in the semiconductor market and foster domestic chip manufacturing capabilities. This investment will not only create job opportunities but also enhance Germany's competitiveness in advanced chip technologies.

Similarly, the €5 billion earmarked for TSMC's fab in Dresden demonstrates Germany's willingness to collaborate with international semiconductor giants to establish cutting-edge chip manufacturing facilities within its borders. By attracting TSMC, a leading global foundry, Germany aims to leverage its expertise and resources to bolster its semiconductor ecosystem.

Overall, Germany's decision to allocate a significant portion of its Climate and Transformation Fund budget to subsidize chip production reflects its recognition of the pivotal role that semiconductors play in driving innovation, economic growth, and sustainability. By supporting both domestic and international players in the semiconductor industry, Germany aims to strengthen its position as a global leader in advanced chip manufacturing and technology development.