Germany plans more chip investments

German Chancellor Olaf Scholz revealed on Wednesday that he was aware of additional plans for significant investments in chip production in Germany. This trend is particularly welcome as Europe seeks to reduce its reliance on China in strategically important industries.

Scholz informed the Bundestag lower house of parliament about recent projects announced by chipmakers Intel and Infineon, while also mentioning that he knew of other plans by German companies and various others. He emphasised that Germany’s efforts would contribute to reducing companies’ dependence on semiconductor supplies from other regions. This statement came shortly after China’s announcement of restrictions on two metals crucial for high-speed computer chips, leading to concerns about potential limitations on rare earth exports.

Germany, alongside other European Union members, has committed to decreasing its dependence on China due to concerns over China’s more assertive diplomacy and closer ties to Moscow. As one of the top importers of the affected metals, gallium and germanium, Germany aims to strengthen its resilience by ensuring that certain industries, particularly chip production, are located within Europe and Germany.

Contrary to concerns about Germany losing its appeal as an investment destination, Scholz highlighted recent investments made by major firms. Intel, for example, announced plans last month to invest over 30 billion euros ($33 billion) in the development of two chip-making plants in the central city of Magdeburg. Additionally, discussions are underway with Taiwan’s TSMC and Sweden’s electric vehicle battery maker, Northvolt, regarding potential production setups in Germany. The country has already succeeded in convincing Tesla to establish its first European gigafactory there.

Scholz expressed his enthusiasm for the expansion of semiconductor production in Germany, stating that it sends an impressive signal that both German and international companies are choosing the country as their preferred location for such investments.