Wolfspeed teams with ZF to build US$3 billion chip plant in Germany

AMERICAN chipmaker Wolfspeed plans to build a US$3 billion plant to make electric vehicle chips in Germany, with automotive supplier ZF investing US$185 million to take an equity stake in the plant, company officials told Reuters.

Wolfspeed said it planned for the factory, which will be located on the site of a former coal power plant in the southwest German state of Saarland, to start production in 2027.

Wolfspeed chief executive Gregg Lowe told Reuters the Saarland site would be about one-third bigger than Wolfspeed’s existing flagship factory in upstate New York and was expected to rank as the world’s biggest production facility for chips made out of silicon carbide, an alternative semiconductor material that is more energy efficient than traditional silicon and helps boost the range of electric vehicles.

German Chancellor Olaf Scholz is expected to attend an event announcing the factory.

Lowe said the project would cost US$3 billion and would depend on government subsidies that Wolfspeed expects to cover a “big part” of the cost. Wolfspeed has applied for the subsidies, but they still require European Commission approval. ZF will take a minority stake in the factory, Stephan von Schuckmann, member of the ZF board of management, told Reuters, though the companies declined to say what percentage ZF’s stake will be. ZF’s share of the factory’s chip output will be defined by a separate contractual agreement, the companies said.

Wolfspeed’s Lowe said the US company selected Germany for its next factory after examining several European sites. He said Wolfspeed was drawn to Germany’s large manufacturing workforce, which Wolfspeed expects to help boost the factory’s profitability.

“The quality level and education level of technicians in Germany is very, very high,” Lowe told Reuters. “Our task will be just training them on semiconductor machines, and we’ve got four years to do that.” REUTERS