Germany plans to invest 2 billion euros in its semiconductor sector!
Germany has revealed that it plans to invest around 2 billion euros in the country's semiconductor sector in the form of subsidies, according to Bloomberg. However, other details have not been revealed. This is expected to help many semiconductor companies significantly upgrade their current manufacturing facilities.
Earlier this month, the German economy ministry asked semiconductor firms to submit their subsidy applications. However, the exact amount available as subsidies is yet to be determined. This is likely to be decided after the country's next elections, which are expected to take place in February 2025.
The move follows the recent disruption of Intel plans to invest around 30 billion euros in a semiconductor plant that is supposed to be located in Magdeburg. This has come as a major blow to Germany, as this project was supposed to be one of the largest semiconductor plants in the country.
Other companies such as ZF Friedrichshafen AG and Wolfspeed Inc have also put their German chipmaking plans on hold, further weakening Germany's domestic semiconductor sector.
It had also received around 10 billion euros in subsidies under the European Chips Act 2023. However, the company had decided to postpone these plans as it struggles to deal with mounting losses and falling sales.
Semiconductors are used in a variety of devices, including cameras, cell phones, microprocessors, satellites, military equipment, and cars. Germany, along with several other major European economies, has invested heavily in its domestic semiconductor industry in recent years in an effort to rapidly ramp up production of sophisticated products.
This is expected to significantly contribute to Germany's global competitiveness, as well as reduce dependence on countries such as the US and China. This has become especially important following the supply chain disruptions seen during the COVID-19 pandemic.
Escalating trade and geopolitical tensions between China and the US, mainly over Taiwan, have also contributed to this urgent need for major European countries to develop their semiconductor and artificial intelligence industries. This is largely due to growing anxiety about China using advanced artificial intelligence technology for military applications and spyware.
To support this, acts such as the European Chip Act have been created, which works towards improving the EU semiconductor industry as a whole, with the aim of increasing Europe's semiconductor market share worldwide to 20% until the end of the decade.
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