Germany's southern state of Bavaria, home to BMW and Audi, is in talks with Intel to build a European chip factory in a bid to counter supply bottlenecks that have hampered production in the automotive sector, the state's economy minister said.
In recent months, the U.S. chipmaker has been seeking 8 billion euros ($9.5 billion) in public subsidies to build a semiconductor manufacturing site in Europe.
"I strongly support this," Economy Minister Hubert Aiwanger said. "The possible location of a large international semiconductor manufacturer in Bavaria is an outstanding opportunity."
Bavaria has suggested a little-used air base in Penzing-Landsberg, west of Munich, as a possible location for the factory, Aiwanger said.
A shortage of semiconductors is causing headwinds for Europe's car manufacturers and threatens to de-rail Germany's economic recovery from the coronavirus pandemic.
The European Union is considering creating a semiconductor alliance including STMicroelectronics, NXP, Infineon and ASML to cut dependence on foreign chipmakers during a global supply chain crunch.