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Germany wants to invite chipmakers for local production and offers 14 billion euros in state aid

The German government wants to attract chipmakers for a €14 billion (roughly Rs. 1,13,132 crore) support, Economics Minister Robert Habeck said Thursday, adding that the shortage of semiconductors used in everything from smartphones to cars is a major problem.

A global shortage of chips and bottlenecks in supply chains have created havoc for automakers, healthcare providers, telecom operators and others.

“That’s a lot of money,” Habeck said at a meeting of the family business in Hannover.

In February, the European Commission outlined plans to boost chip production in the European Union due to booming demand by proposing new legislation 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 massive new €17 billion (roughly Rs. 1,37,358 crore) chip manufacturing facility. Government sources said the state was promoting the project at the time, allocating billions of euros.

Habeck said there will be other examples, such as Magdeburg, although companies in Germany will still depend on other manufacturers of components such as batteries.

“We have to develop our own strategy for securing raw materials,” he said.

The American chipmaker is spreading its investments in Europe across half a dozen countries, including expanding an existing plant in Ireland, setting up a design and research center in France, and a packaging and assembly plant in Italy.

Initial spending will be 33 billion euros (approximately Rs 2,76,294 crore), including 17 billion euros (approximately Rs 1,42,337 crores) in Germany, where the automotive industry is likely to be the main consumer of advanced chips. that could use technology as small as 2 nanometers.

German automaker Volkswagen highlighted problems caused by a shortage of chips on Tuesday, saying it sold 2 million fewer vehicles than planned last year because of the problem.

© Thomson Reuters 2022

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