Robert Bosch (ROBG.UL) opened a 1 billion euro ($1.2 billion) chip plant in Germany on Monday, a record investment by the leading automotive supplier as it stakes a claim to equipping the latest electric and self-driving cars.

The plant, located in a semiconductor hub near Dresden, opens as the automotive industry battles a global chip shortage, and will increase Bosch’s ability to serve carmakers directly, relying less on third-party manufacturers.

"Every chip that we make here in Dresden is one chip less that is lacking. That helps," management board member Harald Kroeger told Reuters in an interview.

Addressing an online opening ceremony, Chancellor Angela Merkel said semiconductor shortages were hampering Germany's economic recovery, and that it was important to strengthen resilience against external supply disruptions.

"We aren't in pole position - we have to catch up," Merkel said. "We must be ambitious. Our competitors around the world aren't sleeping."

The Bosch plant will make specialist power-management chips and Application Specific Integrated Circuits (ASICs) that are designed to carry out a single task, such as triggering a car's automatic braking system.

It will not however address shortages of products like microcontrollers which have forced auto makers to halt production and are expected by industry leaders and analysts to extend into next year.

"The fab (chip fabrication plant) may help to insulate Bosch and its key customers somewhat," said Asif Anwar at Strategy Analytics. "But it is unlikely to serve as a gap filler to the current shortages being experienced in the automotive market."

The Bosch plant, which received 200 million euros ($243 million) in state aid under a European Union investment scheme, will start making chips for power tools in July, with output of automotive chips to follow from September.

"The state-of-the-art technology in Bosch's new semiconductor factory in Dresden shows what outstanding results can be achieved when industry and government join forces," said European Commission Vice-President Margrethe Vestager.

Kroeger said Bosch supported a broader strategic push by Brussels to revive Europe’s semiconductor industry. A recently unveiled plan targets doubling the region’s share of global chip production to 20% by 2030.

($1 = 0.8221 euros)

By: DocMemory
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