In the auto industry's rocky transition to electric vehicles, German Chancellor Olaf Scholz is celebrating a small but symbolic victory.
The cause is plans by ZF Friedrichshafen and U.S. semiconductor maker Wolfspeed for the world's biggest production facility for chips made out of silicon carbide, an alternative semiconductor material that is more energy efficient than traditional silicon and helps to boost the range of electric vehicles.
Wolfspeed said it planned for the factory to start production in 2027. It will be located on the site of a former coal power plant in Saarland, southwest Germany. ZF will hold a minority stake in the plant, and a majority stake in an R&D center the two companies will establish.
Saarland, which is home to a Ford Motor factory, has an economy deeply tied to the fading internal combustion engine. The new chip plant is seen as a symbol of optimism for tens of thousands of workers in Germany's car industry who are worried that the transition to electric vehicles could leave them without jobs.
It also comes as governments in Europe jockey for new industrial projects amid unease that subsidies on offer in the U.S. via the Inflation Reduction Act (IRA) will lure planned investments in Europe across the Atlantic.
"Amid the concerns that the U.S. wants to divert investments from Europe with its Inflation Reduction Act, we are showing that a U.S. firm wants to invest in Germany," a German government source said.