"The raw material of the 21st century” 

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The Federal Chancellor at the project launch of the Infineon semiconductor factory "The raw material of the 21st century” 

As the Federal Chancellor pointed out, semiconductors are used in everything from wind turbines and photovoltaic systems to heat pumps and electric cars, which is why the construction of a new semiconductor factory in Dresden is great news for the energy transition as well as for Germany and the rest of Europe and will secure jobs, economic prosperity, and the future.

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Federal Chancellor Scholz at the breaking ground ceremony of Infineon’s semiconductor factory in Dresden

A promising project start: Federal Chancellor Scholz at the breaking ground ceremony of Infineon’s semiconductor factory in Dresden.

Photo: Federal Government/Kuegeler

A single electric car uses 1500 microchips, which illustrates just the how great the future need for them will be in Germany and the rest of Europe. This, as Federal Chancellor Olaf Scholz emphasised at the breaking ground ceremony for the new Infineon Smart Power factory in Dresden, is precisely why it is so important to continue investing in semiconductor production capacity here in Germany and throughout Europe. "Semiconductors," said the Federal Chancellor, "are often referred to as the petroleum of the 21st century; in other words, the central commodity on which almost everything else depends.”

The production of semiconductors will make a key contribution to covering 80 per cent of Germany's gross electricity consumption with renewable energy sources by 2030 as well as to achieving a completely climate-neutral economy by 2045, because, among other things, wind turbines, photovoltaic systems, and heat pumps need microchips. The EU has also recognised this requirement and plans to ensure that 20 per cent of global semiconductor production takes place in Europe by 2030. Federal Chancellor Scholz said in Dresden that the German government emphatically supports this objective, because becoming independent of other global regions for our semiconductor supply is of central importance. "That is the strategic dimension," he said.

Dresden as the focal centre of the "European Chip Act"

Building Infineon's semiconductor production facility in Dresden is entirely in line with the European Chip Act. The EU wants to use it to bring semiconductor production to Europe in order to be more independent, resilient and, above all, competitive in the green technology sector going forward. Subject to a state aid ruling from the European Commission and the national allocation procedure, Infineon is also expected to receive EU funding. The plan is for Germany and Europe to be able to rely to an even greater extent on their own microchip development and production capacities.

"This," said the Federal Chancellor, "is neither about a European go-it-alone strategy nor about the dismantling of global supply and value chains, nor about the decoupling of economic areas,” but rather, he continued, it is about an intelligent, forward-looking, de-risking strategy. In concrete terms, this means that Germany and the rest of Europe want to reduce the risks associated with excessive dependencies to an even greater extent, which means diversification in terms of supply sources and strategically expanding our own capacities within Europe.

The European Chip Act  will require the EU to mobilise €43 billion in public and private investment as well as introducing measures to help EU Member States and international partners to better prepare for and to be able to counter future supply chain disruptions more rapidly.

The production of microchips will secure jobs and economic prosperity

As the Federal Chancellor pointed out, it was also excellent news that the European Chip Act had provided Infineon with the necessary incentives to continue investing in Germany "because,” as he said, “the microchips manufactured here in Dresden will secure jobs, economic prosperity, and the future as well as helping to make our industry more resilient. They will supply German companies – from small and medium-sized enterprises to major corporations – with precisely those components they need to compete successfully in the global marketplace with environmentally friendly technologies."

The goal is to achieve this in Dresden when production starts in the autumn of 2026. The construction of Infineon's semiconductor factory is scheduled to begin this autumn. Infineon's investment will expand the manufacturing basis for semiconductors, which will in turn support decarbonisation and digitalisation. The microchips they produce are used in everything from power supply components in energy-efficient chargers to small actuators in cars, data centres, and internet applications. 

Infineon is putting another five billion euros into the expansion of its Dresden site and the project is expected to create 1000 jobs.

The "new German tempo" is taking effect

One of the core technologies for speeding up the transformation in Germany is semiconductors. As the Federal Chancellor stressed: "We have to be quick off the mark – and get even faster. We need to keep the pressure on. This is what I mean when I talk about the German pace".  Infineon, he continued, was a good example of this. The European Chip Act had rapidly provided the necessary incentives for Infineon.

The Federal Government initiated a number of measures last year to ensure the success of the energy transition including a significant reduction in planning and approval times for electrical grids and wind turbines. Offshore wind farms can now be approved, built, and connected more rapidly, whilst 

legally binding land quotas have been put in place for onshore wind power farms. Expanding renewable energy production facilities now takes legal precedence over other legally protected interests. According to Scholz, "recent government resolutions have given our country even more momentum. Additional areas will now be set aside for wind turbines and photovoltaic power production facilities. Dilapidated bridges will also be replaced more quickly in future, and motorways where traffic jams are common will be upgraded more quickly. We will also be expediting the nationwide charging infrastructure, the Federal Chancellor added, "to ensure that we really will have 15 million electric cars on our roads by 2030." Semi-conductors are needed for all of these projects.