German automotive supplier ZF is reportedly withdrawing from a planned $3 billion microchip manufacturing venture with U.S. chipmaker Wolfspeed in western Germany, an industry source disclosed. The shift comes after Wolfspeed announced a suspension of the project due to lower-than-anticipated semiconductor demand and uncertainties regarding its entry into the European market.
ZF was expected to invest $185 million for a stake in the Saarland plant, which was intended to produce chips specifically for electric vehicles. The initial announcement for the facility and a research and development center in Germany was made in February 2023. Should these plans be fully shelved, it would mark another setback for Germany’s ambitions to enhance its attractiveness as a business location.
ZF declined to comment on the situation, while representatives from Wolfspeed and the German economy ministry were not immediately available for comment. In June, Reuters reported that Wolfspeed had postponed its plans, with funding still being sought and construction not expected to commence until mid-2025 at the earliest. A Wolfspeed spokesperson indicated at that time that while the plant was not entirely scrapped, the company was prioritizing production ramp-up in New York following cutbacks in response to weaknesses in the electric vehicle markets in both Europe and the U.S.
The difficulties faced by Wolfspeed are reflected in the broader semiconductor landscape, where rival U.S. chipmaker Intel (INTC.O) recently announced a two-year delay in constructing a plant in eastern Germany as part of its cost-reduction efforts. These challenges come amid initiatives by German Chancellor Olaf Scholz to rejuvenate the nation’s economy, which is facing issues related to deindustrialization and high energy costs. “We need more growth. The pie has to get bigger again,” Scholz stated at a meeting with the BDA employers’ association, emphasizing the necessity of collaboration with industry to foster economic development.
Source: Reuters
