Source: Content from Semiconductor Industry Observation

Recently, it was reported that Wolfspeed had changes in its factory in Germany and ZF withdrew from the joint venture. Subsequently, ZF said that the factory was under the responsibility of Wolfspeed and they were only providing support.

According to the latest news, local officials said on Wednesday that American chipmaker Wolfspeed and automotive supplier ZF have shelved plans to build a semiconductor factory in Germany, which is another blow to Berlin's chip manufacturing ambitions.

Anke Rehlinger, leader of the western region of Saarland, where the factory was originally planned to be built, said that the project "has not been abandoned, but the time has been postponed indefinitely."

Rehlinger said it must be recognized that the uncertainty surrounding the Wolfspeed settlement agreement is a setback for Saarland. "The company has made it clear to us that they are still committed to the construction of the Ensdorf factory. However, considering the market situation, Wolfspeed is postponing the investment to a specific date."

Rehlinger said the company cited the development of electric vehicles in Europe and internationally and the production situation at its New York headquarters as reasons.

01 A once grand plan

On February 1, 2023, Wolfspeed, a global leader in silicon carbide technology, and ZF Friedrichshafen, a global technology company committed to building the next generation of mobility, announced a strategic partnership. The two parties plan to establish a joint innovation laboratory to promote the advancement of silicon carbide system and equipment technology in mobility, industrial and energy applications.

The strategic partnership also includes a major investment by ZF to support the construction of the world's largest and most advanced 200mm silicon carbide wafer factory in Ensdorf, Germany. The joint innovation laboratory and Wolfspeed wafer factory will be part of the microelectronics and communication technology framework of the Important Project of Common Interest in Europe (IPCEI), and its implementation will be subject to approval by the European Commission's state aid rules.

According to reports at the time, Wolfspeed will build a fully automated, highly advanced 200mm wafer factory in Saarland, Germany. ZF plans to support the construction of the new factory by providing hundreds of millions of dollars in financial investment to replace Wolfspeed's common stock. As part of the investment, ZF will hold a minority stake in the factory, and Wolfspeed will maintain all operational and management control of the new factory. ZF and Wolfspeed announced a strategic partnership in 2019 to jointly create industry-leading, high-efficiency electric drivetrains with silicon carbide inverters. Today's announcement represents the next generation of innovation being developed by both parties.

Gregg Lowe, President and CEO of Wolfspeed, said: "ZF is a strong partner who brings us industry-leading experience in electric mobility and the ability to accelerate innovation in silicon carbide systems and power devices. I believe this partnership will elevate the global impact of silicon carbide semiconductor technology to new heights, supporting sustainable development and efficiency improvements in multiple industries."

Stephan von Schuckmann, member of the board of directors of ZF Group, said: "ZF and Wolfspeed work together to combine expertise in power electronics and systems with application technology, which is unparalleled in the industry. Wolfspeed has more than 35 years of experience in silicon carbide technology, while ZF has complete and unique insights in all areas such as passenger cars, commercial vehicles, construction machinery, wind power generation and industrial applications. Close cooperation between wafer fabs and R&D centers will ensure that we develop breakthrough innovations and bring more benefits to customers."

02 German chip industry suffers another setback

EU countries including Germany are seeking to boost domestic semiconductor supplies to reduce reliance on Asia for key components in products ranging from smartphones to fighter jets. The planned investment in Saarland is smaller - about 2.7 billion euros - but delays and uncertainty about the project are a "blow," Rehlinger said.

Both Wolfspeed and ZF have faced challenges in recent months, with Rehlinger hinting at weak global demand for electric vehicles and European chips. German auto supplier ZF announced large-scale layoffs earlier this year amid pressure to transition to electric vehicles and foreign competition.

But this is not the first time German chips have been thwarted.

Intel CEO Pat Gelsinger said in mid-to-late September that the company would delay construction of a chip factory in Magdeburg, Germany, for at least two years.

Intel plans to build two chip factories in Saxony-Anhalt, near Berlin, creating about 3,000 jobs, and plans to hold a groundbreaking ceremony this year, according to Deutsche Presse-Agentur.

According to the German news agency dpa, "The investment is expected to be around 30 billion euros ($33 billion), and last year the German government pledged 9.9 billion euros in state aid for the solution."

However, the plan has now been shelved as Intel struggles to control losses. The group launched a cost-saving plan earlier this year.

"We must continue to act urgently to establish a more competitive cost structure and achieve the $10 billion savings target we announced last month," Gelsinger said in a press release and letter to employees.

"Depending on the expected market demand, we will suspend the projects in Poland and Germany for about two years," he added.

Production is expected to start in 2027 or 2028.

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