Recently, according to a report by Taiwanese media citing sources, TSMC's European plant construction schedule will be postponed for two years. The industry therefore speculated that the demand for automotive chips may no longer face a shortage as before. But it must be said that Europe's ambition to boost semiconductors has begun to show initial signs. With the formal passage of the European Chip Act, wafer fabs are springing up in Europe. Europe: A place that "produces" semiconductor giants Before talking about the new wafer fab, let's review the original strength of European semiconductors. In the global semiconductor landscape, Europe has always played an important role. Europe can be said to be a region that "produces" semiconductor giants. First of all, the UK is the kingdom of compound semiconductors, and IQE is the leader in the field of compound semiconductors. In the field of compound epitaxial wafers, IQE occupies 60% of the global market share; the UK also has IP manufacturers such as Arm and imagination, both of which are among the top ten semiconductor IP suppliers in the world; the recently emerging AI chip company Graphcore is also a rising star in the UK semiconductor industry. Then, Germany is even more known as the "strongest industrial country in Europe" and the "world's automotive kingdom". In the field of semiconductors, Germany has strength that cannot be ignored. Germany not only has IDM giants such as Infineon and Bosch, but Infineon is in the first place in the fields of automotive electronics, power supply and security IC. In the semiconductor industry chain, Bosch is one of the few companies that is familiar with the micro-electromechanical industry and is an expert in electronics and software. In the field of MEMS sensors, Bosch's market share is about 22%; there are wafer foundries such as X-Fab, which is the world's largest SiC foundry; there is also Siemens, the world's third largest EDA design company; in the field of semiconductor materials, Germany has silicon wafer manufacturers such as Siltronic, SiCrystal SiC substrate supplier (acquired by Japan's Rohm), and Zeiss lenses are key components of lithography machines. Europe also has the lithography machine overlord ASML located in the Netherlands, STMicroelectronics and NXP, which have long been among the top 20 global semiconductor suppliers, and French semiconductor silicon wafer manufacturer Soitec, etc. It can be seen that Europe still has a lot of say in the entire semiconductor market, but Europe lacks advanced processors and wafer fabs. Over the years, Europe has also tried to improve its chip manufacturing capabilities, but has always been powerless. The passage of the European Chip Act may inject a spring into Europe's manufacturing industry. The Chip Act is a booster After experiencing the disadvantages of chip shortages and supply chain dependence and realizing the booming semiconductor market, the European Commission proposed a set of comprehensive measures on February 8, 2022 to strengthen the EU semiconductor ecosystem, namely the European Chip Act. Over the past few decades, the EU's microchip production in the global market has remained at a stable share of 10%. The EU's goal is to increase semiconductor production capacity to 20%. The bill plans to invest 43 billion euros to support the development of chips, and more than two-thirds of the funds are designated for the construction of new, leading chip manufacturing plants, or "large wafer fabs". On January 24, 2023, the bill was officially passed. According to the latest draft and amendments to the European Chip Act, its chip strategy mainly revolves around five major goals:Strengthen the EU's leadership in research and technology;

Establish and enhance the EU's innovative capabilities in advanced, energy-efficient, and secure chip design, manufacturing, and packaging, and transform them into commercial products;

Establish an appropriate framework to significantly increase chip production capacity by 2030 (increasing the share of global semiconductor capacity to 20%) and reduce external dependence;

Advertisement

Address the serious shortage of skills, attract innovative talents, and support the training of skilled labor;

Deepen the understanding of the global semiconductor supply chain.

The European Commission has allocated 15 billion euros in funding for public and private semiconductor projects by 2030, providing Europe with a unique opportunity for development. This initiative has not only attracted EU member states but also some other major semiconductor manufacturers to set up factories in Europe.

New wafer fabs pouring into Europe

To develop a local manufacturing industry, companies based in Europe are undoubtedly the backbone. We have seen that manufacturers such as Infineon, STMicroelectronics, and Bosch, which previously had wafer fabs, have already built new factories. The most exciting thing for Europe is that it has attracted the presence of manufacturers such as Intel and Wolfspeed.

Infineon's largest single investment in history

In the fiscal year 2022, Infineon achieved revenue of 14.218 billion euros, a 29% increase from the previous year's 11.006 billion euros. Infineon's analysis is that more than half of the revenue growth is the result of increased semiconductor sales, which is inseparable from the expansion of Infineon's front-end manufacturing capacity, including the opening of a new 300mm thin wafer power electronics chip factory in Villach (Austria) in September 2021, as well as the continuous expansion of capacity in Dresden (Germany) and Kulim (Malaysia).On February 16, 2023, Infineon Technologies received approval to begin construction of a semiconductor factory in Dresden, Germany, valued at 5 billion euros (5.35 billion USD). The factory is set to commence production in 2026 and represents the largest investment in Infineon's history. It will primarily focus on the production of power semiconductors and analog/mixed-signal components. Infineon is seeking 1 billion euros in public funding for this factory.

Currently, Infineon operates several front-end and back-end factories across Europe. The following image illustrates the locations of Infineon's manufacturing plants and headquarters in Europe. The numbers ① and ③ correspond to Infineon's front-end manufacturing plants in Villach, Austria, and Dresden, Germany, respectively. Number ② represents Infineon's headquarters in Neubiberg, Germany. Number ④ is Infineon's integrated front-end and back-end factory in Regensburg, Germany. Numbers ⑤ and ⑥ are Infineon's two back-end factories located in Warstein and Ceged, Hungary, respectively.

STMicroelectronics: Building Two New Wafer Factories in Europe

STMicroelectronics (ST) is also a major player among European semiconductor giants, with a net income of 16.13 billion USD in 2022, marking a 26.4% increase. In 2023, ST plans to invest approximately 4 billion USD in capital expenditure, mainly to enhance the production capacity of 12-inch wafers and the production capacity of silicon carbide chips and substrates. The red section of the following image shows the current factory situation of ST in Europe, indicating that ST currently has about six front-end wafer factories and three back-end factories in Europe.

On August 4, 2022, ST signed a commercial and cooperation agreement with GlobalFoundries to establish a new jointly operated 300mm semiconductor manufacturing factory near ST's existing 300mm factory in Crolles, France. The new factory will primarily produce products using FD-SOI or fully depleted silicon-on-insulator semiconductor manufacturing technology. The target is to achieve full production capacity by 2026, with an annual output of up to 620,000 300mm wafers once fully completed. The project is expected to cost 5.7 billion USD. The construction of this wafer factory will not only support ST's plan to achieve an annual revenue of 20 billion USD but also help GlobalFoundries produce more chips based on its popular 22nm 22FDX chip manufacturing process.

In October, ST announced plans to build an integrated silicon carbide (SiC) substrate manufacturing factory in Italy, which will be the first factory in Europe to mass-produce 150mm SiC epitaxial substrates. It will be built alongside the existing SiC device manufacturing facilities at ST's plant in Catania, Italy. Catania has long been the center of ST's power semiconductor expertise, where ST has conducted integrated research, development, and manufacturing of SiC with Italian research entities, universities, and suppliers. This move will advance ST's vertical integration strategy for its silicon carbide business. ST expects to start production in 2023, thereby achieving a balance between internal and commercial supply of SiC substrates. The Italian government will invest 730 million euros in the factory over five years under the framework of the National Recovery and Resilience Plan.

Bosch: Continuous Expansion of Two Major Wafer Factories

Bosch mainly has two large wafer factories, located in Reutlingen and Dresden. The core technology of the Bosch Dresden wafer factory is the manufacturing of 300mm diameter wafers, with a single wafer capable of producing 31,000 chips. Since Bosch introduced 200mm wafer technology in 2010, the investment in the two wafer factories in Reutlingen and Dresden has reached 2.5 billion euros. In addition, Bosch has invested billions of euros in the development of micro-electromechanical systems (MEMS) technology.In 2022, Bosch invested over 400 million euros to expand its wafer fabs located in Dresden and Reutlingen, Germany (mainly), as well as the semiconductor test center in Penang, Malaysia. The production capacity of the factory will be further enhanced in 2022. Among them, the Dresden wafer fab began producing 300mm wafers in July 2022, six months ahead of schedule, initially for Bosch power tools. Chips for automotive customers started production in September, three months ahead of schedule. In 2023, about 50 million euros will be used to build the Reutlingen wafer fab adjacent to Stuttgart.

Intel: "Although late, but in" the establishment of a factory in Germany

Intel has a history of more than 30 years in Europe. After the European Union introduced the "European Chips Act," it also attracted Intel to invest and expand production again. As early as mid-March last year, Intel announced that the first phase of its IDM2.0 plan is to invest up to 80 billion euros in the entire semiconductor value chain over the next ten years. In the initial stage, Intel plans to build two first-class semiconductor factories in Magdeburg, Germany, which is expected to start construction in the first half of 2023 and put into operation in 2027, with a total project investment of 17 billion euros.

However, due to the energy crisis in 2022, which led to rising energy and raw material costs, Intel announced in December last year to postpone the plan to open a chip factory in Germany in 2023. According to the news, Intel set the factory budget at 17 billion euros, but now the price has soared to about 21 billion euros. In addition, Intel's revenue fell more seriously in 2022, and the revenue gap is also a consideration for the delay in building the factory. In 2022, Intel's annual revenue was 63.1 billion US dollars, down 20% from 79 billion US dollars in 2021, and the net profit was 8.014 billion US dollars, down 60% from 19.87 billion US dollars in 2021, which is almost the worst annual report for Intel in more than 20 years. Moreover, Intel CEO Pat Gelsinger said that economic uncertainty will continue into 2023. Therefore, Intel hopes that the European Union will provide an additional 3.2 billion euros in subsidies on the basis of the 6.8 billion euros already promised.

Despite these financial issues, Intel insists on continuing to build a new chip factory in Germany. Currently, Intel is carefully monitoring market conditions and working closely with government partners to advance our plans in Magdeburg and Ohio in the best way.

Wolfspeed is building the largest SiC factory in Germany

Wolfspeed announced that it will invest 3 billion US dollars to build a highly automated 200mm SiC wafer manufacturing factory in Saarland, Germany. The factory will be built on a former coal-fired power plant site of 35 acres (14 hectares) in Saarland. This is Wolfspeed's first factory in Europe and will also become the world's largest silicon carbide chip production factory. The wafer fab construction is expected to start in the first half of 2023 and is planned to start mass production within four years. The new factory is part of Wolfspeed's 6.5 billion US dollar global capacity expansion plan, which will support its long-term revenue outlook of 4 billion US dollars for the fiscal year 2027.

Wolfspeed's site selection is largely attributed to its partner ZF, an automotive supplier that has been operating in Saarland for decades and has good connections with local politicians. ZF will invest 185 million US dollars to take a stake in the chip factory and will hold the majority of the research center's shares. In addition, according to Wolfspeed CEO Gregg Lowe, Wolfspeed is expected to receive a subsidy of 20% of the investment amount.TSMC Under Consideration?

Since the second half of 2022, TSMC's plans to build factories in the United States, Japan, and other places have become clear, and Europe is also an important region for TSMC to consider. As early as the end of last year, there were reports that TSMC was interested in building a factory in Germany. According to informed sources, TSMC will send a team of senior executives to Germany this year to discuss the government's support for future factories and the ability of the local supply chain to meet its needs. According to sources from wafer fab tool manufacturers, Dresden in Germany is most likely to be the location.

However, according to recent reports from Taiwan media, TSMC has decided to postpone the timeline for building a factory in Europe by two years, considering that the supply and demand of automotive chips are no longer severely tight, and most automotive chip customers can be transferred to factories in Japan, the United States, and other places for production. However, TSMC has not commented on these rumors.

In conclusion, it is more accurate to say that wafer fabs are pouring into Germany rather than Europe. It can be seen that among many European countries, Germany is the candidate site for most manufacturers to build wafer fabs. One of the main reasons is that Germany is famous for its excellent engineering technology. The German automotive industry plays a key role in the global transition to electric vehicles, and the demand for automotive chips will flourish in the next decade. In the layout of wafer fabs in Europe, Germany will play a very important role.