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Electronics & Microtechnology

Semiconductor Industry in Germany

Germany is seeking to establish itself as a major semiconductor production force in order to safeguard technological sovereignty and prepare the way for future markets dependent on semiconductor applications.

Between 2012 and 2021, the worldwide semiconductor industry revenue increased from USD 300 billion to USD 583.5 billion. The coronavirus pandemic has accelerated the digitalization process. At the same time, Covid-19 containment measures have led to a global slowdown in chip production and delivery. The resulting semiconductor shortages have created bottlenecks in industries worldwide.

Germany is the beating heart of the European semiconductor industry, ranking among the world’s top semiconductor production locations. The country boasts an unparalleled density of world-leading device manufacturers and suppliers for materials, components, and equipment across the entire value chain. The country plans to spend up to EUR 50 billion to secure Germany’s position as a major semiconductor production location.

Chip Giants Investing in Germany

Germany’s chip production ambitions are helping attract more and larger investment projects as the continent seeks to establish security of supply and technological sovereignty into the future.

Intel

US-based semiconductor manufacturer Intel officially announced Magdeburg as the location for its new European semiconductor production facilities in March 2022. It’s the largest-ever foreign direct business investment in the country and in Europe as a whole. Intel will initially spend EUR 17 billion on its new location but could put around EUR 80 billion in its European operations, if it builds all of the construction facilities – or “fabs” – that are planned.

Ask Intel and others - Germany is Europe’s new microchip mecca

Bosch

Bosch has invested EUR 1 billion production facility in Dresden. The plant is Europe’s first fully digitalized semiconductor production facility. The project, first announced in 2018, will see auto chips and sensors manufactured at the Saxony site. Bosch received EUR 140 funding for the project as part of the “Important Project of Common European Interest: Microelectronics” initiative.

  • Investment into new fab: ~ 1 billion EUR, 700 new jobs, biggest investment in Bosch history
  • 1st Bosch chip factory equipped with 5G
  • Applications: autonomous transport systems via local cloud, remote access to plants, M2M communication

Globalfoundries

US chip manufacturer Globalfoundries has announced plans to more than double capacity at its Dresden site – increasing production from 400,000 wafers to more than one million wafers annually. This represents an investment of more than EUR 1 billion.

  • Planned investments in coming years: 1.1 – 2.4 billion EUR
  • Local demand for power electronics in automotive, mobile chips due to 5G, industrial use chips and sensors

Infineon

Infineon plans to invest up to EUR 2.4 billion at its Dresden site over the coming years to meet demand for power electronics in auto, mobile chips for 5G, and industry chips and sensors. The company has submitted proposals as part of the microelectronics IPCE, with the scale of the fourth factory module investment subject to government subsidy commitments.

  • Investment of > EUR 1 billion into existing fab announced Feb 2021
  • Local production: audio converters for cell phones, driver chips for OLED screens, electronics for voice recognition systems

Semiconductor Location Germany

Germany is a major microelectronics force, securing its place at the top of the international table as Europe’s leading semiconductor production location.

Future production location Germany

The country has announced ambitious investment plans for the domestic production of semiconductors – a 2025 timeline has been agreed for Europe to develop its own leading-edge processor chips.  Germany wants the European chip industry to invest up to EUR 50 billion in semiconductor production to establish European digital sovereignty.

“We want to strengthen the production of chips in Germany and Europe in order to become less dependent on international supply chains."

Federal Minister for Economic Affairs and Climate Action Dr. Robert Habeck


Germany is investing significantly in its microelectronics sector to establish the country as an international semiconductor production force. The ambitious deployment and development of semiconductor-based applications in the automotive, energy and manufacturing sectors is critical to the country meeting its climate goals. Germany’s climate neutrality targets are creating attractive business opportunities and favorable market conditions for international companies.

Microelectronics and semiconductor network and cluster landscape

Germany’s microelectronics sector is organized into strong regional clusters that form a complete industry value chain network responsible for developing the smart, integrated systems required to meet industry’s changing needs. Germany is already home to a number of strong semiconductor and microelectronics sites including the states of Saxony, Bavaria and Baden-Württemberg.

Internationally active companies, renowned research institutions, small and medium-sized enterprises, and start-ups are all at home in the different industry clusters across the country. These companies – specialists in areas including sensor technology, interconnection technology and system integration – enjoy international success.

Semiconductor Location Germany Executive Summary

  • Strongest semiconductor ecosystems in Saxony, Bavaria and Baden Württemberg – biggest in Europe
  • EU & Germany enabling large investments through IPCEI and other programs
  • Key customers & partners in chip design, 5G, automotive, industry, EUV in EU/Germany
  • Germany is fully dedicated to renewable energy with total share of 46 percent in 2020
  • Germany and EU are prepared to make speedy permits and grants available
  • Germany Trade & Invest and ministries ensure political support on all levels of government

Strengthening Microelectronics in Europe

The European Commission has set new targets for semiconductor production by 2030, launching a EUR 43 billion initiative to establish the European Union as a global leader in semiconductor development and production.

Chips for Europe Initiative

  • EUR 11 billion in public investment until 2030 from the European Union and member countries. This funding will also lead to significant private investment leverage.
  • The initiative will be implemented by the Digital Europe and Horizon Europe programs.
  • Digital Europe supports digital capacity building in key areas including artificial intelligence, cybersecurity and high-performance computing.
  • Horizon Europe focuses on precompetitive research, technology development, and semiconductor and materials innovation.

European Semiconductor Act

The European Commission (EC) has announced proposals to instigate new legislation to establish Europe as an internationally leading semiconductor production site by the end of the decade. The EC has set a 20 percent target of global semiconductor provision by 2030. The plans will guarantee security of semiconductor supply in response to the ongoing global shortage of semiconductors.

More than EUR 11 billion in funding to the end of the decade will be ploughed into the initiative in order to create semiconductor hubs across the European Union, develop new semiconductor technologies, improve design and engineering capabilities, and help companies in the semiconductor value chain obtain financing and equity. By 2030, more than EUR 43 billion in public and private investment and measures will be mobilized to strengthen Europe’s position in the semiconductor market.

European Semiconductor Act - Key Measures


  • Investment in next generation technologies
  • Access to design tools and pilot lines for the prototyping, testing and experimentation of cuttingedge chips
  • Certification procedures for energyefficient and trusted chips to ensure quality and security for critical applications
  • Investor-friendly framework for establishing manufacturing facilities
  • Support for innovative startups, scale-ups and SMs in accessing equity finance
  • Promotion of skills, talent and innovation in microelectronics
  • Tools for anticipating and responding to semiconductor shortages and crises to safeguard security of supply
  • Creation of semiconductor partnership with likeminded countries

Important Project of Common European Interest: Microelectronics

Thirty-two microelectronics business projects have been selected for support as part of an Important Project of Common European Interest (IPCEI) to promote Europe and Germany as semiconductor production sites.

Investment volume of more than EUR 10 billion has been set aside for the 32 projects selected by the Federal Ministry of Economic Affairs and Climate Action. Funding will be provided for projects across the value chain in order to promote innovation and ensure guarantee of supply in Europe.

The selected projects include production of materials, chip design, semiconductor production, and integration into components and systems. Twenty EU member states – including Germany – and around 90 countries count among the IPCEI participants.

Semiconductor Market Opportunities

Increased levels of automation in passenger vehicles and the ongoing digitalization of industry are just two areas driving demand for advanced microelectronics solutions in application industries.

Automotive Industry

The automotive industry is the largest industry sector in Germany, generating turnover of EUR 379.3 billion in 2020. Despite a 13 percent drop in annual turnover caused by the coronavirus pandemic, it remains the strongest and most export-driven industry in Germany – with export volume of almost EUR 243 billion. Innovation is a key priority– 55.3 percent of companies have introduced innovative products to the market in the past three years – with R&D spending just below EUR 50 billion in 2019.   German automotive companies are responsible for around one third of global auto industry R&D investment.

World’s Automotive Innovation Hub

The global auto industry is in a period of radical transformation due to the rise of e-mobility and connected and automated driving technology developments. More than 130 years after inventing the automobile, Germany remains the world’s automotive innovation hub – leading the way out of the coronavirus pandemic and forward to a new mobility era.

Automotive 4.0

Semiconductor demand in the auto industry is set to grow by around 12 percent annually according to the German Electro and Digital Industry Association. In 2019, automotive semiconductor generated EUR 41.2 billion in global turnover according to IHS Markit. Total turnover of around USD 50 billion was forecast for 2021. This development is thanks to the growing importance of electric mobility and autonomous passenger vehicles. Although still in its infancy, autonomous driving will give birth to new business models and a data-based ecosystem for connected in-car services.

Premium Passenger Vehicles

The advent of connected services also complements growth in the premium passenger-vehicle segment. Germany currently produces around 36 percent of all premium passenger vehicles globally, with 67 percent of all premium passenger vehicles manufactured by German OEMs.

Manufacturing and Production Industry

Microelectronics has a decisive role to play in the ongoing digitalization of industrial production.  Microelectronics and microsystems are central to Germany’s Industrie 4.0 project to establish the country as an integrated industry lead market and provider. As key enablers in industrial automation, electronics and sensors help transform production systems and products into cyber-physical systems (CPS). Embedded system production technologies and intelligent production processes show the way forward for peerless ICT-based integration making vertically integrated and networked manufacturing a reality.

Microlectronics Success Story Germany

Germany’s rich and diverse industry network and cluster landscape has given rise to a number of microelectronics regions with strong European and international profiles. The number of international companies locating to Germany is growing.

World-Class Locations

Saxony

The Free State of Saxony – home to the Silicon Saxony cluster – in Eastern Germany enjoys a reputation as Europe’s biggest micro- and nanoelectronics location. Silicon Saxony counts as the biggest high-tech network for the microelectronics, smart systems, photovoltaic, software, and applications sectors in Europe. Knowledge transfer and intra-company synergies are created as a result of close cooperation within the network; further consolidating the region’s reputation as a center of ICT excellence. The Cool Silicon cluster, also in Saxony, was set up to develop energy-efficient – and even zero energy – solutions in the three ICT focus areas of computing, broadband wireless and sensor networks.

Baden-Württemberg

The microTEC Südwest cluster in Baden-Württemberg counts as a major European competence and cooperation network for intelligent microsystem technology solutions in the fields of production, mobility, health, and energy. The it’s OWL cluster in OstWestfalen-Lippe is playing a leading role in developing automation and mechatronics technologies for industry.  Intelligent technical systems are being developed in numerous projects to make advanced manufacturing and Industrie 4.0 a reality.

Bavaria

Bavaria is home to some of the world’s leading semiconductor producers including Infineon Technologies and Siltronic to name but two. As the site of many leading national and international actors in electrical engineering and electronics, the southern state is playing a leading role in the development of technologies for the Industrial Internet of Things. Apple plans to invest over EUR 1 billion to build a new facility in Munich focusing on 5G and future wireless technologies. The tech giant’s European Silicon Design Center will be located in the Bavarian capital, which is already the company’s largest engineering hub in Europe.

World-leading Research and Development

Fraunhofer Group for Microelectronics

A number of institutes within the Fraunhofer Group for Microelectronics and the Leibniz Association are also playing a decisive role in consolidating Germany’s role as a major international semiconductor and electronics research location. The Fraunhofer Group for Microelectronics is a research and development service provider in the areas of microelectronics and smart systems integration. Part of the Fraunhofer-Gesellschaft, Europe’s largest application-oriented research organization, the group seeks to bridge the gap between fundamental research and product development in the fields of microelectronics/nanoelectronics and microsystem & communication technology in order to strengthen German innovativeness.

Research Fab Microelectronics


  • Fraunhofer Group for Microelectronics in cooperation with the Leibniz institutes IHP and FBH
  • Largest crosssite R&D cooperation for micro- and nanoelectronics in Europe
  • World leader in nanoelectronics R&D with 11 Fraunhofer and 2 Leibniz Association institutes
  • Europe’s biggest electronics R&D organization (2,000 research staff)
  • EUR 350 investment in state-of-the art equipment
  • 12,5000 sqm clean room space

The Leibniz Association

The Leibniz Association is a non-profit association made up of 97 basic and applied science and research institutions. Non-profit organized in nature, the Leibniz Association promotes science and research objectives among its member institutions with specific significance accorded their scientific, legal and economic independence. Member activities include knowledge-based and applied basic research, scientific infrastructure maintenance, research-based service provision, and eight research museums.

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