Wolfspeed delays $3 bn semiconductor plant in Germany Amid EU chip production challenges

Wolfspeed has revealed there will be a significant delay in its plans to build a $3 billion semiconductor plant in Saarland, Germany, Reuters news report said.


Wolfspeed’s decision to postpone its investment in Germany will be casting a spotlight on the European Union’s ongoing difficulties in boosting local chip production and reducing reliance on Asian suppliers. Originally scheduled to commence construction soon, the project is now deferred to mid-2025 at the earliest, two years behind the initial target.

A Wolfspeed spokesperson confirmed that while the project is not canceled, the North Carolina-based company is prioritizing its production ramp-up in New York. This decision follows a reduction in capital spending due to weak demand in the European and U.S. electric vehicle (EV) markets, where the chips are primarily used.

Wolfspeed, announcing its latest quarterly result, said it has targeted approximately $2 billion of net capital investment for fiscal 2024.

The delay comes amidst pressure from an activist investor for Wolfspeed to enhance shareholder value after a 51 percent decline in its stock over the past year. This postponement exemplifies the struggles within the EU to advance its semiconductor industry, despite initiatives like the EU Chips Act, launched in 2022. The Act aims to mobilize 43 billion euros ($47 billion) in public and private investments to fortify Europe’s semiconductor sector.

Although the EU Chips Act was a strategic response to the global chip shortage induced by the COVID-19 pandemic, progress has been sluggish. Many proposed projects are still awaiting European Commission approval for state aid, essential for their financial feasibility. Consequently, the EU’s goal to capture 20 percent of the global chip market by 2030 appears increasingly unattainable, according to Jan-Peter Kleinhans, a chip expert at the German think tank Interface.

Despite these challenges, there have been notable announcements.

Intel is planning a $33 billion plant in Magdeburg, Germany, expected to be the largest in Europe, though its start has been delayed by logistical and regulatory hurdles.

TSMC is set to begin constructing an $11 billion facility in Dresden this year, in collaboration with automotive chip makers Robert Bosch, NXP, and Infineon.

Other projects have seen incremental progress.

STMicroelectronics received EU approval last month for a 5 billion-euro silicon carbide plant in Italy.

Onsemi announced plans for a $2 billion expansion in the Czech Republic, pending EU approval.

STMicroelectronics and GlobalFoundries are moving forward with a 7.5 billion-euro plant in Crolles, France, though GlobalFoundries’ participation is still uncertain.

In Germany, Infineon is constructing a 5 billion-euro power chip plant in Dresden, aiming for a 2026 completion, despite not yet having EU aid approval.


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