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Germany dreams of becoming a giant in the semiconductor industry

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Germany multiplies announcements of massive investments in semiconductor production, but between labor shortages and disputes over subsidies, it still has a long way to go to establish itself in this strategic sector.

From electric cars to smartphones, wind turbines, and even rockets, electronic chips are the “oil of the 21st century,” components on which “everything depends,” as German Chancellor Olaf Scholz put it during the inauguration of a new factory for German manufacturer Infenion. ) at the beginning of May.

Scholz talked about semiconductors with the Koreans during a weekend visit to Seoul, inviting them to invest in Europe to strengthen supply chains.

The EU’s stated goal is to reach 20% of the global market in 2030, twice what it is currently. And for that, it will require four times more production in the old continent.

This is the goal of the European “chip law” reached in April, which provides for the allocation of 43 billion euros for public and private investment.

The first economy in Europe wants to lead this movement to reduce dependence on Asia. In addition to the new Infineon plant in Dresden – a project worth five billion euros – the US groups Intel and Wolfspeed have announced major investments in Germany in recent months.

Taiwanese in Dresden?

Germany will be hit hard if it can win hosting the first European factory for the Taiwanese group TSMC, one of the world’s largest chip makers.

Talks have been underway for more than a year to establish a factory in the Dresden region, the first pole in Europe for microelectronics, known as “Silicon Saxony”. A decision in this regard is expected in August, according to TSMC.

But about 200 kilometers away, in the Magdeburg region in particular, doubts replaced the place of euphoria sparked by the announcement of the American giant “Intel” last year, investing 17 billion euros, as the construction of the plant, which was scheduled to start in the first half of the year 2023, did not start. after.

The group, which saw a record quarterly loss at the start of the year, says in a statement to AFP that “a lot of things have changed” in one year, at a time when it has suffered a sharp decline in sales of personal computers and smartphones.

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The group explains that in addition to “geopolitical challenges… the turmoil in the global economy has led to an increase in costs, from building materials to energy.”

For its part, the Ministry of Economy says that additional public aid is expected to “bridging the cost gap for the planned project, which has increased significantly.”

Not self sufficient

However, this race for subsidies sometimes raises concerns. “We’re spending a lot of money…to increase the safety of supply a little bit,” says Clemens Fuest, one of the country’s well-known economists.

And while public aid, in Dresden or Magdeburg, will run into the billions, Germany and Europe will still be very dependent on chips produced outside the continent, and “you have to imagine what we could have done with that money,” says Fuest, who heads the Institute for Studies. The economic “IFO” in an interview with the “IRD” channel recently.

For his part, Infineon CEO Juchen Hannebeck warned during a conference call this month that even if dependencies in semiconductors can be reduced, there will be no “self-sufficiency for any country or region” in this sector.

On the other hand, many workers in the sector believe that the aid should be more massive. “The funds announced under the chip law are a good start, but they are still insufficient by international standards,” Frank Bozenberg, director of Silicon Saxony, the semiconductor industry development body in the Dresden region, told AFP.

Taiwan (where 90 percent of the world’s most advanced semiconductors are produced), South Korea, and increasingly China, currently dominate the market.

On the other hand, Europe must face competition from the United States, which is spending large sums of money to boost national production.

For Germany, another major challenge is finding enough workers. According to a study conducted by the German Economic Institute in December, there is currently a shortage of qualified employees amounting to 62 thousand employees in the various professions that fall within the framework of the chip industry.

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