Bosch Opens $1.2 Billion Semiconductor Factory in Germany

As chip scarcity continues to disrupt the tech industry, a new push by tech players is aiming to upset the shortage. Many tech companies have been working to establish semiconductor factories to produce chips for their own use and to supply to others.

Germany technology and parts supplier Robert Bosch, is the latest among them. The company opened a €1 billion ($1.2 billion) chip factory in Dresden, Germany on Monday, the single largest investment in the company’s history. The plant, which will mainly supply automotive customers, is a major signal that connected and electric vehicles are here to stay. TechCrunch has the story.

“Regardless of which powertrain we talk about … always we need a semiconductor and sensor,” Bosch’s executive vice president of automotive electronics Jens Fabrowsky told TechCrunch.

The plant will handle front-of-the-line processing, or wafer fabrication, in the semiconductor manufacturing process. The 300-millimeter wafers will be sent to partners, typically in Asia, to do packaging and assembly of the semiconductors.

300 millimeters is a “new field of technology,” Fabrowsky explained. As opposed to the 150- or 200-millimeter wafers that are produced at Bosch’s nearby factory in Reutlingen, Germany, the larger wafer size offers greater economies of scale because you can produce more individual chips per wafer.

The 77,500-square-foot plant will run on what Bosch calls “AIoT,” a term that combines artificial intelligence and Internet of Things to denote a fully connected and data-driven system that’s unique to the facility. Bosch will not only have real-time data on the approximately 100 machines, but also on the power, water and other aspects of the facility — up to 500 pages of data per second, Fabrowsky said. The AI-driven algorithm should detect an anomaly from any of the connected sensors immediately.

Despite its high levels of automation, the plant will employ around 700 people once it is fully operational.

It is unclear whether the plant will help resolve the ongoing global semiconductor shortage, which has forced automakers like General Motors and Ford to slash production volumes and temporarily shutter manufacturing facilities.

“At the point when we decided [to build the plant] it was purely driven by technology,” Fabrowsky said. “It was clear we needed to go into 300 [millimeters], and we needed to invest in some more capacity.”

The facility will begin production in July with chips for power tools before beginning production on automotive chips in September. It generally takes over 20 weeks to make a semiconductor chip, Fabrowsky said, including 600 individual steps in the wafer facility alone.

The company will also be investing €50 million ($61 million) to extend the clean room facilities at its Reutlingen plant, Bosch board member Harald Kroeger said at a media briefing Monday.

Bosch has applied to Germany’s Federal Ministry for Economic Affairs and Energy under a microelectronics investment program to subsidize expenditures for the plant of up to €200 million ($244 million). It must submit evidence of expenditures before it receives the funds, a Bosch spokesperson told TechCrunch.

The global chip scarcity, induced by the pandemic is likely going to last into the near future. Glenn O’Donnell, a vice president research director at advisory firm Forrester, believes the shortage could last until 2023.

“Because demand will remain high and supply will remain constrained, we expect this shortage to last through 2022 and into 2023,” he wrote in a blog.

As manufacturers grapple with the hard reality, help lies on increased production and new companies stepping into the semiconductor business. With existing chip companies like TSMC and Intel, working on production expansion; and new companies augmenting their production, the 2023 projection may well be beaten.