The ambitious chip factory project in Ensdorf, Saarland, is now in jeopardy after ZF Friedrichshafen, a leading automotive supplier, pulled out of the venture. This follows Wolfspeed’s decision to put the project on hold due to weakening demand for electric vehicles, according to reports from Handelsblatt and confirmed by industry sources to SPIEGEL.
Wolfspeed, the US semiconductor company, had planned to invest in a state-of-the-art silicon carbide chip factory, which would have been a critical step towards reducing Europe's reliance on Asian chip suppliers. However, an insider told Reuters that the company is now reconsidering its entry into the European market amid uncertain demand.
The proposed €2.75 billion project was announced in early 2023 with great fanfare, attended by German Chancellor Olaf Scholz and Federal Minister of Economics Robert Habeck. ZF had pledged €170 million towards the project, but with Wolfspeed halting plans indefinitely, ZF has decided to withdraw its contribution. The Friedrichshafen-based supplier confirmed its exit, stating that Wolfspeed is responsible for the project, but added that the situation might allow them to allocate funds to other ventures.
The factory, scheduled to begin production in 2027, would have received over €500 million in government subsidies. It was intended to produce silicon carbide semiconductors that would extend the range of electric vehicles, a crucial development in the rapidly growing EV sector.
Impact on European Chip Independence
The collapse of the Wolfspeed-ZF chip factory plan marks another setback in Europe's efforts to strengthen its semiconductor supply chain. Following the earlier delay of Intel's planned factory in Magdeburg, this latest development further hampers Europe's strategy to reduce dependence on chipmakers from Asia, a vulnerability that was exposed during the COVID-19 pandemic when supply shortages severely affected the automotive industry.
The pause in the Ensdorf project raises concerns about Europe's ability to build domestic semiconductor capacity in a competitive and rapidly changing global market.
