Nationalism threat to energy transition investments, says Scholz at chip plant construction start

Nationalism and resentment endanger investments in key future technologies, Germany's chancellor Olaf Scholz said at the ceremony for the start of construction of a semiconductor chip production plant in eastern Germany, Reuters reported. "We still need a pro-European Germany that's open to the world, instead of nationalism and resentment," Scholz said. With the help of state support, Taiwanese chip manufacturer TSMC and its partners Bosch, Infineon und NXP Semiconductor plan to invest over 10 billion euros in the factory in the city of Dresden, which would manufacture microchips mainly for the automotive industry. The factory is based in the eastern state of Saxony, where voters will head to the polls on 1 September. Residents in the eastern state tend to lend more support to parties that reject further EU integration, multilateralism, and current energy and climate policies, compared to voters in western German regions.

Germany will support the project with up to 5 billion euros. The European Commission has now given its approval under state aid rules. "Germany can look forward to a new, state-of-the-art chip factory that will strengthen the supply of innovative chips in Germany and Europe, address the existing and future needs of user industries and create thousands of high-tech jobs," economy minister Robert Habeck said. The plant could begin operations at the end of 2027 and produce 40,000 wafers per month by the end of 2029, said the ministry.

Green technologies – including wind parks, photovoltaic systems, electric vehicles and heat pumps – require chips, and their production is an important building block on the path to reaching climate neutrality. Under the European Chips Act, the EU aims to bring more semiconductor production to Europe to reduce dependencies and strengthen security of supply and competitiveness. The European Commission and member states aim to mobilise 43 billion euros in private and public investments over the next few years to bring semiconductor manufacturing to the continent. Until now, the EU has mostly imported microchips from Asia and the United States.