Bosch will spend 3 billion euros on semiconductor manufacturing

Technology company Bosch announced on Wednesday that it will invest 3 billion euros ($3.01 billion) in chip manufacturing by 2026, including the creation of two new development centers and a larger wafer facility in Dresden.

The investment should increase Europe’s capacity for chip fabrication in a worldwide industry that American and Asian competitors still dominate. Bosch will seek funding from the European Union under the Important Projects of Common European Interests (IPCEI) framework.

Hartung and Bosch

Chief Executive Stefan Hartung said that Europe should and can take advantage of its inherent advantages in the semiconductor sector. Producing chips specifically for the European industry must be the aim.

To establish itself in the expanding market for processors to equip self-driving and electric cars despite a broader shortage, Bosch established a one-billion-euro chip facility in Dresden last year. This was a record expenditure for the company.

The new development centers in Reutlingen and Dresden will each receive 170 million euros, with 250 million euros going toward enlarging the current location in Dresden. It has not yet been decided how the remaining cash would be used, according to Hartung.

Demand and Supply

Even though inflation relieves pressure on some sections of the sector by reducing demand for pricey consumer items, the CEO anticipates bottlenecks in chip supply, including congested transportation networks and low production capacity, to persist for several more months.

According to Hartung, the Bosch chips must be sent from Germany to Malaysia and back again as part of the manufacturing process, so any shipping delays could lengthen delivery timelines by several weeks.

He continued by saying that there are some markets where demand would undoubtedly decline and you may always order huge amounts. However, demand is still robust in those places where not as much capacity has been installed.

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