In a significant setback for Germany’s electric vehicle (EV) ambitions, US chipmaker Wolfspeed and German auto supplier ZF have put their €3 billion joint venture to build a microchip factory on hold. The decision, driven by weaker-than-expected consumer demand for EVs and production difficulties, adds to the growing woes plaguing the country’s high-tech manufacturing sector.
A Dream Deferred
The Wolfspeed-ZF project, hailed by Chancellor Olaf Scholz as part of a “return of the industrial revolution” to Germany just last year, was slated to create up to 1,000 jobs in the former coal-mining region of Saarland. The factory was intended to produce silicon carbide components, a critical element in extending EV range and efficiency.
However, Wolfspeed has now decided to “suspend” the plans indefinitely, citing improved productivity at its US plants and a slower-than-anticipated ramp-up of the EV market. The company believes its existing capacity will suffice for the foreseeable future, a spokesperson said.
Compounding Challenges
The Wolfspeed-ZF setback is just the latest in a series of blows to Germany’s struggling manufacturing sector:
- US chip giant Intel recently delayed work on two €30 billion factories in Magdeburg, citing cost-cutting needs
- Automaker Volkswagen is considering potential factory closures as it grapples with the transition to electric vehicles
- Major industrial firms like BASF, Thyssenkrupp, and Miele are slashing well-paid positions amid fears of a catastrophic slump
These troubles have contributed to a grim economic outlook for Germany, with the International Monetary Fund projecting flat growth this year and a meager 0.8% climb in 2025 – the worst performance among highly industrialized nations.
Saarland’s Shattered Hopes
For Saarland, a small state bordering France, the suspension of the Wolfspeed-ZF factory is an especially bitter pill to swallow. The region had successfully transitioned away from coal mining in recent decades, weathering the steel crisis with the help of the automotive sector.
The Ensdorf research and development center was meant to rise from the ashes of a former coal-fired power plant, a potent symbol of Saarland’s industrial rebirth. Now, with US carmaker Ford also planning to cease production in the state, that renaissance is in jeopardy.
– A Saarland government official, speaking on condition of anonymity
Recharging Germany’s EV Dreams
As Chancellor Scholz scrambles to jumpstart the sputtering German economy, calls are growing for sweeping reforms to eliminate red tape, overhaul taxes, and tackle the nation’s looming demographic crisis. Without decisive action, experts warn, Germany risks squandering its chance to lead Europe’s EV revolution.
For now, the once-gleaming vision of a Silicon Saarland powered by Wolfspeed’s cutting-edge microchips remains a dream deferred – a stark reminder of the daunting challenges confronting Germany’s embattled industrial heartland as it navigates the treacherous road to an electric future.
