The German Economy Ministry wants to release two billion euros for chip subsidies.
The German government wants to support chip companies to develop “modern production capabilities that significantly exceed the current state of the art,” said Annika Einhorn, spokesperson for the German Ministry of Economic Affairs, in a statement. A budget of about two billion euros will be made available for this purpose. The exact amount is not yet known, but the ministry indicated that it is “low single-digit billions of euros,” according to sources to Bloomberg.
Chip companies were already given the opportunity to apply for subsidies by the German economy minister last month. Whether these companies will actually receive the subsidies will depend on the new German government and its budget plans.
Grants
Europe has been trying for some time to reduce its strategic dependence on the Far East on microchips. The global chip shortage of several years ago is partly behind this. The EU was already luring major chip specialists such as Intel to European territory, and more specifically Germany. Intel received a subsidy from Germany of nearly ten billion euros to build a factory in Magdeburg. This project was to cost as much as 30 billion euros in total. Today, however, construction has been postponed by Intel.
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The German government now wants to warm up other chip companies to strengthen the country’s chip industry. In early November, Germany’s economy minister gave chip companies the opportunity to apply for new subsidies. Nevertheless, there is still a lot of uncertainty. In February, Germany’s new government will plan its own budget, leaving chip companies applying for subsidies now waiting in uncertainty.
Chips Act
The Chips Act was created to reduce Europe’s dependence on the U.S. and Asia for its production. That heavy dependence came to light several years ago during the great chip shortage. Europe now wants to move away from that with the Chips Act, which was officially approved in 2023. The Chips Act should more than double Europe’s share of global chip production, to 20 percent by 2030.