Wolfspeed and ZF put German chip factory on ice

Wolfspeed has slowed its plans to build a chip factory in Germany with auto supplier ZF – Copyright AFP/File ADEK BERRY

US chipmaker Wolfspeed and the auto supplier ZF have put plans for a semiconductor factory in Germany on ice, local officials said Wednesday, striking another blow to Berlin’s chipmaking ambitions.

The project was “not abandoned, but pushed back on the timeline to an indefinite point in time”, said Anke Rehlinger, the leader of the western region of Saarland where the factory was set to be built. 

Wolfspeed had told officials the group was “committed” to Saarland but “postponing the investment to an unspecified date”, Rehlinger said at a press conference.

The delay to the factory, which was intended to break ground next year, comes after other planned investments by chipmakers in Germany have been thrown up in the air.

US chip giant Intel said in September it would push back a planned project in Germany by around two years due to “anticipated market demand” that was lower than previously thought. 

The planned factory in the eastern city of Magdeburg, which had been announced to much fanfare, was set to be backed by a huge 10-billion-euro ($10.8-billion) subsidy from the German government. 

EU countries, including Germany, are seeking to boost the domestic supply of semiconductors to reduce reliance on Asia for the production of the key component used in everything from smartphones to fighter jets. 

The planned investment in Saarland was smaller — around 2.7 billion euros — but the delay and uncertainty around the project were a “blow”, Rehlinger said.

Wolfspeed and ZF have both faced challenges in recent months, with Rehlinger alluding to weak global demand for electric vehicles and chips in Europe. 

German auto supplier ZF announced sweeping job cuts earlier this year as it struggles with the switch to electric vehicles and foreign competition.