US chipmaker Wolfspeed said it will build a $3-billion chip plant in Germany, with automotive supplier ZF investing $185 million for an equity stake.

The factory located in the Saarland region is expected to rank as the world’s biggest facility for chips made out of silicon carbide, with production poised to start in 2027.

ZF will take a minority stake in the factory, Stephan von Schuckmann, member of the ZF board of management, told Reuters. ZF’s share of the factory’s chip output will be defined by a separate contractual agreement.

Wolfspeed expects to receive 20 percent of the investment amount in subsidies, Chief Executive Gregg Lowe told German newspaper Handelsblatt.

Europe has passed a 45-billion-euro plan to boost its market share in semiconductors to 20 percent by 2030 from 8 percent.

Volkswagen, Europe’s top carmaker, earlier warned that the chip squeeze meant 2023 would remain volatile and challenging, but expected supplies to improve.

Wolfspeed’s silicon carbide chips have been gaining traction with electric car makers as they can handle high voltages and are more power efficient.

Wolfspeed announced in September a new plant in the United States due for completion in 2030.