The German government is preparing to inject billions of euros into the country’s semiconductor industry, just two months after Intel shelved plans to build a €30 billion chip factory in Magdeburg.
German Economy Ministry spokeswoman Annika Einhorn said on Thursday that the new funds would be made available to chip companies to develop “modern production capacities that significantly exceed existing technology.”
The subsidies will total approximately €2 billion, according to two individuals who attended an official event on the funding plans this week. These individuals spoke to Bloomberg on condition of anonymity because the talks were not public.
A ministry spokesman described the amount as being in the “low single-digit billions of euros” but declined to provide further details in response to a Bloomberg inquiry.
Earlier this month, the Economy Ministry called on chip manufacturers to apply for these new subsidies. However, the final allocation figures remain uncertain, particularly as Germany’s new government, set to be elected in February, will likely propose its own budget. This introduces uncertainty for chip companies currently applying for funding.
The European Chip Act, adopted in 2023, seeks to strengthen the bloc’s semiconductor ecosystem and double its market share to 20% of global production capacity by 2030.
The German chip sector has recently faced significant setbacks. Intel’s €30 billion chip factory in Magdeburg, once on track to become the largest project supported by €10 billion in subsidies under the EU’s chip law, was postponed by the embattled U.S. company in September.
Similarly, Wolfspeed and ZF Friedrichshafen AG pulled out of a planned chip initiative in western Germany, further underscoring the challenges facing the industry.
The first rounds of German chip subsidies under the European Chip Act were awarded to Intel and a joint venture between Infineon and TSMC in Dresden.
The German Economy Ministry intends to use the newly proposed funds to support 10 to 15 projects across various segments, including the production of raw silicon wafers and the assembly of microchips.
“The funded projects should contribute to a strong and sustainable microelectronics ecosystem in Germany and Europe,” Einhorn stated.
