Merkel urges 'catch up' as Germany opens semiconductor factory

Leading car parts supplier Bosch inaugurated a new semiconductor factory in Germany on Monday, hailed by Chancellor Angela Merkel as a boost to Europe's efforts to reduce reliance on Asian chipmakers at a time of global shortages.

Speaking via video link at the opening ceremony, Merkel said homegrown semiconductors would "make Germany and Europe not just more crisis-proof, but also create new opportunities for growth".

Bosch has invested roughly one billion euro ($1.2 billion) in the highly automated factory, the single biggest investment in the German firm's 130-year history.

Merkel's government has contributed 140 million euros.

The factory is located in Saxony state capital Dresden, a hi-tech hub in former communist East Germany colloquially known as "Silicon Saxony".

Merkel has in recent months repeatedly lamented Europe's dependence on foreign-made semiconductors, and said Monday that the current bottlenecks were "weighing on the economic recovery".

A pandemic-fuelled surge in demand for home electronics has throttled global computer chip supplies, with manufacturers struggling to get their hands on the tiny yet critical components needed in everything from cars and planes to smartphones and game consoles.

But Merkel said even without the pandemic, the burgeoning "internet of things" universe was always going to fuel demand for semiconductors.

If Europeans "want to have a say" in the key market, "we need to catch up to Asia and the United States", Merkel said.

"We have to be ambitious. Our competitors around the world aren't sleeping."

Addressing the same online ceremony, the European Commission's competition chief Margrethe Vestager said the Bosch factory would "strengthen Europe's competitiveness as a cradle for cutting-edge innovations".

She reiterated that the European Union aims to produce 20 percent of the world's semiconductors by 2030.

- 'Every part helps' -

Bosch's so-called smart plant, which will churn out advanced 300-millimetre semiconductor wafers and lean heavily on artificial intelligence for data crunching, has opened ahead of schedule.

The first chips, to be used in Bosch power tools, will roll off the production line in July, six months earlier than originally planned, the firm said.

Production of crucial automotive chips will start in September, three months earlier than projected.

Carmakers have been among the hardest hit by the chip shortages, with giants like Volkswagen and General Motors forced to temporarily trim production earlier this year.

Bosch already makes smaller wafers with diameters of 150 and 200 millimetres at another plant in Germany.

Jens Fabrowsky, executive vice president of Bosch's automotive electronics unit, said the new Dresden plant alone would not solve Europe's lack of semiconductors.

"But in a tense situation, every part helps," he told AFP.

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