US chip manufacturer wants to build billion-dollar factory in Saarland

With up to around 2.7 billion euros, the US chip manufacturer Wolfspeed wants to build the world's largest factory for silicon carbide semiconductors in Saarland. With these chips, Wolfspeed is ushering in "a new era in the automotive industry" - the "transition from the internal combustion engine to the electric vehicle," said CEO Gregg Lowe on Wednesday in Ensdorf, Saarland.

Wolfspeed wants to start building the factory as soon as possible. "As soon as we have the approval of the EU Commission," said Lowe. "We expect them in the next few months." Wolfspeed expects government funding of 20 to 25 percent of the total investment sum.

When fully operational, the factory will have more than 600 workers on board. "And create many more jobs," Lowe said. The market is enormous, the demand for the semiconductors is very high. The modern factory will be built on the site of the former coal-fired power plant in Ensdorf.

Wolfspeed's plans caused a stir. Chancellor Olaf Scholz (SPD) and Federal Minister of Economics Robert Habeck (Greens) traveled to Ensdorf for the appointment. "One can say without exaggeration: with the construction of this factory, the industrial revolution is returning to Ensdorf," said Scholz. "There is much to suggest that the future belongs to silicon carbide semiconductors in the field of new renewable energies, telecommunications and especially in electromobility."

The new chip factory will also make a significant contribution to ensuring that European industry is reliably supplied with semiconductors, said the Chancellor. Over the past few years, people in Germany and Europe have felt how important this is - also how serious the situation could become if the supply of semiconductors falters.

Silicon carbide semiconductors are considered a key technology for the further development of electromobility and autonomous driving. The material is in demand because, in contrast to the silicon most commonly used to date, it enables better use of the energy in batteries: electric cars could be charged faster, drive more economically and thus increase their range.

The car supplier ZF (Friedrichshafen) has a minority stake in the factory. ZF announced that they wanted to support the new building with a three-digit million euro amount. With Wolfspeed, a research and development center is also planned in Germany "to expand global innovation leadership in silicon carbide systems". ZF holds the majority here.

The companies' ambitions go beyond the application in the vehicle, said ZF board member Stephan von Schuckmann. The semiconductors would also be used in charging stations, photovoltaics and wind turbines. ZF also has a location in Saarbrücken with around 9,000 employees, which is currently being expanded to become the lead plant for electric drive systems.

The EU supports business projects in microelectronics. The aim is to bring semiconductor production back to Germany and Europe and not become too dependent on Asian manufacturers, for example.

Wolfspeed is a coup for the small Saarland. "This settlement opens a new chapter in the economic history of this country," said Prime Minister Anke Rehlinger (SPD). With the move to electromobility, the Saarland has achieved “a lighthouse example of successful structural change in an entire industry and thus in our state”. It was "a great day" for Saarland.

Such a high-tech settlement makes Saarland a sought-after location for e-mobility in Europe. Economics Minister Jürgen Barke (SPD) added: "This investment is the real game changer in the industry." It will have a pull effect. As a car and steel state, Saarland is in the midst of structural change. For example, the US carmaker Ford decided against an investment package for its plant in Saarlouis, Saarland. Instead, an electric car platform is to be built in Valencia, Spain.

The US company Wolfspeed was founded in 1987 under the name Cree in Durham, North Carolina. According to Wolfspeed, it is the market leader in the production of semiconductors based on the conductive materials silicon carbide and gallium nitride. For fiscal year 2022, the company reported sales of $746 million (€689 million). By 2027, sales should increase to four billion dollars.

The German-American company cooperation for state-of-the-art chips "Made in Saarland" is "a clear commitment to Germany as a location, for Europe and a great success for Saarland," said Federal Minister of Economics Habeck. The settlement is also very important for climate protection. "We need state-of-the-art chips and innovative power electronics for the use of renewable energies or for e-mobility."