Ensdorf: Wolfspeed builds chip factory in Saarland – economy

Large train station in the small community of Ensdorf im Saarland: Federal Chancellor Olaf Scholz and Economics Minister Robert Habeck came to the farthest corner of the republic, not far from Saarlouis and the French border, on Wednesday to announce good news. The US group Wolfspeed wants to invest up to three billion euros in a state-of-the-art chip factory here together with the automotive supplier ZF. That is a “sign of the attractiveness of Germany as an investment location,” said Habeck. The fact that semiconductor production is being located in Germany, said the Green politician on Wednesday, is “an important signal that Germany is still attractive as a location in a difficult situation, including for high technology”. Scholz said to the investors: “They have found the place they were looking for. The industrial revolution is returning to Saarland. There is a lot of industrial experience in the country.”

Of the investment volume of up to three billion dollars, ZF accounts for 185 million dollars. In return, ZF will also buy Wolfspeed shares for a minority stake in the listed company company receive. Construction should start in the first half of 2023. When fully operational, the factory will employ more than 600 people, plus jobs in the surrounding area, with a total of around 1,000 jobs. Silicon carbide semiconductors are to be manufactured in Saarland, which could be used to increase the range of electric cars. However, they are also used in energy and industrial plants.

A joint research and development center will also be set up, in which ZF will again hold the majority. The project is an integrated part of the “Important Project of Common European Interest (IPCEI) for microelectronics and communication technologies,” ZF said. “These initiatives strengthen the resilience of Europe’s supply chains while supporting the European Green Deal and the strategic goals of Europe’s Digital Decade,” said Holger Klein, CEO of ZF.

A large part of the investment is financed through subsidies

Ensdorf is the home of former CDU Economics Minister Peter Altmaier. “The good old days create the conditions for the good new days,” said Scholz. Because the plant will be built there on the site of a former coal-fired power plant that produced electricity from coal for more than 50 years, and will be about a third larger than Wolfspeed’s existing chip factory in the USA, said company boss Gregg Lowe, who spoke German at the ceremony. The start of production is planned for 2027. “A large part” of the up to three billion dollars in costs is likely to be financed through subsidies, Lowe added. The EU Commission must agree to this. After examining a number of possible locations in Europe, Wolfspeed decided on Germany because of its good location in the heart of Europe and because of the well-trained workforce. “We just fell in love with Saarland,” said Lowe.

According to Lowe, the company hopes for particularly profitable production. “The level of quality and training of technicians in Germany is very, very high,” he praised: “Our job is only to train them for semiconductor machines, and we have four years to do that.” A “groundbreakingly innovative” development and production facility should be created. ZF will receive a minority stake in the factory in Ensdorf, it said. Wolfspeed will have control and operational management of the new factory. ZF and Wolfspeed have been working together in a strategic partnership since 2019. It was said that “groundbreaking innovations” are to be developed in Saarland.

Ford has put the location in Saarland up for grabs

The report is also a success for Saarland because the state has been fighting structural change for years – and because several larger settlements have recently failed. Last June, the car manufacturer Ford announced that it wanted to build its electric cars in Valencia, Spain, from 2025 onwards. It was also a decision against the location in Saarlouis, against a plant with 4,600 employees. A few months later, the Chinese battery cell manufacturer Svolt announced that it would initially settle in Brandenburg. The US electric car manufacturer Tesla had also settled there. The Saarland, it seemed, threatened to fail due to structural change.

If Wolfspeed comes now and wants to create jobs on an old power plant site, that will be interpreted as a trend reversal in the Saar. As proof that the country can manage to move away from the combustion engine towards electromobility and new technologies. Saarland Prime Minister Anke Rehlinger spoke of an “economic awakening” and a flagship project.