Europe’s first digitalised chip plant opens in Dresden

"With the help of artificial intelligence, we are taking the production of semiconductors to a new level in Dresden," said Bosch CEO Volkmar Denner, who said he wants to set "new standards in chip production" with the project.

German engineering and technology company Bosch opened a new semiconductor factory, fully networked with 5G mobile technology, in Dresden on Monday (7 June). The production facility was funded with €140 million as part of a joint European project. EURACTIV Germany reports.

“A new era of microelectronics begins in Dresden today,” said Economy Minister Peter Altmaier, presenting the investment as “a clear signal for the future of Germany and Saxony and an expression of the outstanding research expertise and innovative strength in the Silicon Saxony microelectronics cluster.”

“A strong microelectronics industry in Germany is necessary so that we are at the forefront of future technologies such as 5G, artificial intelligence, automated driving,” he added.

Bosch had invested a total of around €1 billion in the high-tech location – the largest single investment in the company’s 130-year history.

“With the help of artificial intelligence, we are taking the production of semiconductors to a new level in Dresden,” said Bosch CEO Volkmar Denner, adding that he wants to set “new standards in chip production” with the project.

In addition, the construction was funded with €140 million as an ‘Important Project of Common European Interest’ (IPCEI) on microelectronics – a joint project launched by Germany, France, Italy, Austria and the UK to maintain and further develop European competencies and know-how in the field of microelectronics.

The IPCEI has a funding pot of €1.9 billion with 32 European companies involved in the project.

The first computer chips are to leave production in July, half a year earlier than planned, while chip production for the car industry is to start in September.

This could come as a relief for many carmakers and electronics manufacturers currently struggling with a shortage of chips on the market, caused in part because of the surge in demand for notebooks and other types of computer technology during the pandemic.

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Europe’s semiconductor industry far behind

The European Commission’s Vice-President for Digital Affairs, Margrethe Vestager, recently emphasised the importance of semiconductors to “strengthen Europe’s competitiveness as a cradle for cutting-edge innovation.” She also praised the excellent results that can be achieved when “industry and public authorities join forces.”

Interest in expanding the semiconductor industry has recently peaked in the EU.

However, the industry has been struggling for the past three decades. The share of European manufacturers in global production fell from 44% in 1990 to a meagre 9% in 2020, a report by the Semiconductor Industry Association states.

The competition in Asia has attracted entrepreneurs from across the globe with low production costs, which have led to a massive exodus of the European semiconductor industry. None of Europe’s three largest semiconductor producers – STM, Infineon, and NXP – currently make it into the global top 10.

However, microprocessors remain essential for connected vehicles, the internet, high-performance computing and artificial intelligence – all very crucial industries for the EU in the digital age.

The decline of Europe’s semiconductor industry is leading to great dependencies on producers in Asia. However, global supply bottlenecks and problems related to supply chains are now leading to widespread production losses in various industries, including the automotive industry.

The problem has reached such proportions that Altmaier has appealed directly to his Taiwanese counterpart, Economy Minister Wang Mei-Hua, to secure additional supplies for the German automotive industry.

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How the EU is trying to catch up

The EU has already recognised the problem and is trying to reverse the trend. In its DigitalCompass published in March, the Commission set itself the target of increasing the bloc’s market share more than twofold.

By 2030, advanced and sustainable semiconductors in Europe should “account for at least 20% of world production,” the Digital Compass states.

The European Commission also plans to launch a European alliance for processors and semiconductor technologies in the coming months to reduce the industry’s dependence on Asian semiconductor manufacturers and attract more investors, according to the EU industrial strategy renewed in May.

Last December, 22 EU countries also issued a joint declaration to expand cooperation in the field of processor and semiconductor technology.

The declaration aims above all to generate synergies between the various national research and investment initiatives and to create conditions for the next generation of processors and semiconductors, in order to secure the EU a leading role in Industry 4.0.

This turnaround is to be achieved with the help of the EU recovery fund, of which 20% is to be invested in the digital transformation. In the next two to three years, this will already amount to €145 billion.

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[Edited by Luca Bertuzzi/Zoran Radosavljevic]

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