Germany wants to invite chip makers for local production, offers EUR 14 billion in state aid

Germany’s government wants to attract chip makers with 14 billion euros (about Rs 1,13,132 crore) backing it, Economy Minister Robert Habeck said on Thursday, adding that the shortage of semiconductors used in everything from smartphones to cars is a big problem. There was problem.

A global chip shortage and supply chain bottlenecks have wreaked havoc for car manufacturers, healthcare providers, telecom operators and others.

“That’s a lot of money,” Habeck told a gathering of family businesses in Hanover.

In February, the European Commission planned to encourage chip manufacturing in the EU due to a surge in demand, with new legislation proposed to ease state aid rules for chip factories.

In March, US chipmaker Intel announced that it had selected the German city of Magdeburg as the site for a 17 billion euro (about Rs 1,37,358 crore) chipmaking complex. Government sources said at that time the state was promoting the project with billions of euros in funds.

Habeck said there will be more examples like Magdeburg, even though companies in Germany will rely on producers elsewhere for components such as batteries.

“We must develop our own strategy to secure the primary materials,” he said.

US chipmaker Spreading Its investments in nearly half a dozen countries in Europe, including the promotion of its existing factory in Ireland, the establishment of a design and research facility in France, and a packaging and assembly site in Italy.

Initial expenses will total 33 billion euros (about Rs 2,76,294 crore), including 17 billion euros (about Rs 1,42,337 crore) in Germany, where the auto industry is likely to be a major customer for the cutting-edge chips. Which can use technology as small as 2-nanometers.

German automaker Volkswagen on Tuesday highlighted the pain caused by chip shortages, saying the issue led to 2 million fewer cars sold last year than planned.

© Thomson Reuters 2022

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