The German government is preparing billions of euros in new investment in the country’s semiconductor industry, two months after Intel abandoned plans to build a €30 billion ($32 billion) chip plant in Magdeburg.
The new funds will be provided to chipmakers to develop “modern production facilities that are well above the current state of the art,” Annika Einhorn, a spokeswoman for the German economy ministry, said on Thursday.
Two people who attended an official event on the financing plans this week and asked not to be identified because the discussion was not public said the subsidies are expected to amount to about 2 billion euros.
A ministry spokesman said the amount would be in the “low single-digit range of billions of euros,” declining to elaborate.
The Economy Ministry called for chip companies to apply for new subsidies earlier this month, although the final figures are not yet known. A new German government is due to be elected in February and will likely plan its budget, leaving uncertainty for chipmakers currently applying for subsidies.
Governments worldwide are investing public funds in the microprocessor industry as part of efforts to localize the production of components that control everything from advanced artificial intelligence to everyday gadgets. The push comes after supply disruptions caused by the Covid epidemic and as tensions between the US and China over Taiwan rise, which could disrupt a key source of needed technology.
The European Chip Act, adopted in 2023, aims to strengthen the bloc’s semiconductor ecosystem and double its market share to 20% of global production capacity by 2030.
The German chip sector faced two major setbacks. Intel’s €30 billion chip plant in Magedeburg was to be the largest project supported under the EU’s Chip Act with €10 billion in subsidies, but in September the troubled American company postponed its plans. Wolfspeed Inc. and ZF Friedrichshafen AG also abandoned a planned chip manufacturing facility in western Germany.
The first rounds of German subsidies for chip production under the European Chip Act were granted to Intel and the joint venture of Infineon and TSMC in Dresden.
The German Ministry of Economy wants to use the proposed funds to subsidize 10 to 15 projects in various industries, including raw wafer production and chip assembly.
