1675405102 origin 1

Germany: Wolfspeed factory project marks ‘new era’ in automotive industry

origin 1Robert Habeck (L), German Minister for Economic Affairs and Climate Protection, talks to Wolfspeed CEO Gregg Lowe during an event organized by transmission manufacturer ZF Group at the future Wolfspeed chip factory site in Saarland. Boris Roessler/dpa

US chip maker Wolfspeed said on Wednesday it is seeking to build the world’s largest silicon carbide semiconductor factory in the southwestern state of Saarland.

With these chips, Wolfspeed is ushering in “a new era in the automotive industry: the transition from the combustion engine to the electric vehicle,” Chief Executive Gregg Lowe said during a visit to the factory site planned by German Chancellor Olaf Scholz and the Minister of Economy. Robert Habeck Wednesday.

With a sum of about 2.7 billion euros ($2.94 billion), Wolfspeed plans to build the Ensdorf factory on the site of a disused coal-fired power plant.

Silicon carbide semiconductors are seen as a key technology for the further development of electric vehicles and autonomous driving. The material is in demand because the different type of silicon allows electric cars to be charged faster, drive more economically and thus increase their range.

Wolfspeed wants to start building the factory as soon as it gets the green light from the European Commission. “We look forward to it in the next few months,” Lowe said. He said he expects a government subsidy of 20 to 25 percent of the total investment

When fully operational, the factory will have more than 600 employees on board, he said. “And create a lot more jobs,” Lowe said. The market is huge, he said, and the demand for semiconductors is very high.

“It is no exaggeration to say: With the construction of this factory, the industrial revolution is returning to Ensdorf,” said Scholz. “There is much to say that the future belongs to silicon carbide semiconductors in the field of new renewable energies, telecommunications and above all electromobility”.

Habeck said the investment demonstrated that “clean” industry production remained possible in Germany.

The new chip factory will also make a significant contribution to ensuring that European industry reliably receives semiconductors, the chancellor said.

Germany’s major automaker has struggled since the pandemic with bottlenecks in the supply of semiconductors, which mostly come from Asia and the US, forcing major industry names to partially halt production at times.

Germany wants to bring chip production closer to automakers.

This is also consistent with the EU’s current discussion of securing national supply chains to compete with the US.

Scholz said the controversial US grant program, the historic Inflation Reduction Act (IRA), should be an incentive to boost investment opportunities in Europe.

“This includes making EU state aid legislation even more streamlined and also, in the short term, more flexible, so that investors know in advance what support they can count on,” said Scholz.

The comments from German leaders came on the same day that European Commission President Ursula von der Leyen announced plans to develop a support fund and allow for more state aid subsidies.

This is intended to help the European clean energy technology industry compete with the US and China.

Scholz praised these proposals, saying they were a step in the right direction.

The EU has been quick to respond to the IRA, a 346 billion euro ($367 billion) package approved by the United States, part of which boosts domestic clean energy production. The bloc fears the legislation could cause EU-based companies to relocate abroad.

The IRA provides tax credits to U.S. consumers who purchase electric vehicles with batteries made domestically and in some countries with free trade agreements with the United States. The EU and the US are major trading partners, but they do not have such an agreement.

Addressing this recent IRA friction, Scholz said the bill was first and foremost an important step in US progress on climate policy, one that Europe has welcomed.

“And at the same time, of course, we’re talking to our American friends to make sure European companies aren’t disadvantaged,” he added. “Because it is not tariff barriers or strict rules of origin that guarantee innovation, but open markets and fair competition”.

Wolfspeed was founded in 1987 under the name Cree in Durham in the US state of North Carolina. In fiscal 2022, the company had revenues of $746 million. By 2027, sales are expected to rise to $4 billion.

Business daily Handelsblatt also reported that automotive supplier ZF holds a minority stake in the microelectronics factory.

origin 1German Chancellor Olaf Scholz speaks during an event at the future Wolfspeed chip factory site in Ensdorf in the Saarland. Harald Tittel/dpa
origin 1German Chancellor Olaf Scholz speaks during an event at the future Wolfspeed chip factory site in Ensdorf in the Saarland. Boris Roessler/dpa
origin 1(LR) Holger Klein, Chief Executive Officer of ZF Group, Anke Rehlinger, Minister President of Saarland, German Chancellor Olaf Scholz, and Gregg Lowe, Chief Executive Officer of Wolfspeed, stand in front of the decommissioned coal-fired power plant during an event at the future headquarters of the Wolfspeed chip factory in the Saarland. Harald Tittel/dpa
origin 1Gregg Lowe, CEO of Wolfspeed, speaks during an event at the future location of the Wolfspeed chip factory in Ensdorf in the Saarland. Harald Tittel/dpa
origin 1German Chancellor Olaf Scholz (R) shakes hands with Wolfspeed CEO Gregg Lowe at an event organized by transmission manufacturer ZF Group. Harald Tittel/dpa