The German government is preparing billions of euros of new investments into the nation’s semiconductor industry, two months after Intel Corp shelved plans to build a 30 billion euro (US$31.6 billion) chip factory in Magdeburg, Germany.
The new funds would be provided to chip companies to develop “modern production capacities that significantly exceed the current state of the art,” Annika Einhorn, a spokesperson from the German Ministry for Economic Affairs and Climate Action, said in a statement on Thursday.
The subsidies are expected to total about 2 billion euros, said two people who attended an official event about the funding plans this week and speaking on condition of anonymity.
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The sum would be in the “low single-digit billion euro range,” a spokesperson for the ministry said in response to a query from Bloomberg News, declining to be more specific.
The ministry had published a call for chips companies to apply for new subsidies earlier this month, although the final figures are still in flux. A new government is set to be elected in February and would likely plan its own budget, leaving uncertainty for the chip companies now applying for the subsidies.
Governments around the world have been investing public funds in the chip industry as part of an effort to localize production of components that control everything from cutting-edge artificial intelligence to everyday gadgets. The push comes after COVID-19 pandemic era supply disruptions and as rising tensions between the US and China over Taiwan could interfere with a key source of the essential technology.
The European Chips Act, passed last year, aims to strengthen the bloc’s semiconductor ecosystem and double its market share to 20 percent of global production capacity by 2030.
Germany’s chip sector has faced two major setbacks. Intel’s 30 billion euro chip factory in Magedeburg was on track to be the biggest project supported under the EU’s Chips Act with 10 billion euros in subsidies, but the troubled US company postponed its plans in September.
Wolfspeed Inc. and ZF Friedrichshafen AG also withdrew a planned chips venture in western Germany.
The first rounds of German subsidies under the EU’s Chips Act were granted to Intel and a joint venture between Infineon and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in Dresden, Germany.
Germany’s economic ministry wants to use the newly proposed funds to subsidize 10 to 15 projects across a range of fields, including the production of raw wafers and the assembly of microchips.
“The funded projects should contribute to a strong and sustainable microelectronics ecosystem in Germany and Europe,” Einhorn said.
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