Germany earmarks 20 billion euros in subsidies for chip industry

BERLIN, July 25 (Reuters) – Germany plans to invest around 20 billion euros ($22.15 billion) in the semiconductor industry in the coming years, the economy ministry said on Tuesday, amid growing alarm over supply chain fragility and dependence on South Korea and Taiwan for chips.

The country has managed to incentivize global chipmakers to set up factories by offering subsidies under the European Chip Act which aims to double the block’s share of global chip production to 20% by 2030.

Intel (INTC.O) last month Finished plans to spend more than 30 billion euros to develop two chip factories in Magdeburg, the largest foreign investment ever by Germany.

The ministry said Taiwanese semiconductor maker TSMC (2330.TW) also expressed interest in investing in a semiconductor production facility in Germany and that the ministry was in close contact with the company regarding an investment decision.

TSMC, the world’s largest contract chipmaker, has been in talks with the German state of Saxony since 2021 for the construction of a manufacturing plant, or “fab”, in Dresden.

Across the package, Intel will receive grants worth nearly 10 billion euros. The rest would go to other chipmakers, including Infineon (IFXGn.DE)Globalfoundries (GFS.O) and TSMC.

The money will be taken from the Climate and Transformation Fund from 2024, the ministry said, adding that it could only fund individual projects after approval by the European Commission.

The amount is subject to the approval of the European Commission.

While Germany hasn’t revealed how much will go to TSMC, GlobalFoundries has criticized Berlin’s subsidies to its Taiwanese rival with its CEO Thomas Caulfield narrative the Financial Times that these funds will “distort competition”.

($1 = 0.9029 euros)

Reporting by Riham Alkousaa in Berlin and Supantha Mukherjee in Stockholm, Editing by Friederike Heine and Louise Heavens

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