Bosch semiconductor senior Vice-President Dirk Kress: ‘European over-regulation and red tape are holding back productivity growth’


With the largest investment Bosch has ever made, it is further expanding its semiconductor activities, especially in Dresden because of the high-quality value chain that’s already there. ‘The region offers near-perfect conditions for us’, Dirk Kress explains. He is less positive about the availability and accessibility of public funds and tax cuts in Europa, especially when compared to the US and Asia. ‘If we get this right, Europe has a good chance of becoming a key player in the global industrial chip ecosystem.’ An interview with the senior Vice-President carrying overall responsibility for Bosch Semiconductor Operations in Reutlingen and Dresden.

Why did Bosch make its largest investment in its history (1 billion) in Dresden? What’s so special about this region to do this? What exactly sets it apart from other semiconductor hubs in Europe?

‘Semiconductors are a core technology of Bosch and it’s strategically important to develop and manufacture them ourselves. With its wafer fab in Dresden, which opened in June 2021, Bosch has responded to the increased demand for semiconductors. We now manufacture chips on the basis of 300-millimetre wafers for automotive and industrial applications in Dresden. After comparing sites around the world, Bosch settled on Dresden as the location for its wafer fab. Here, modern entrepreneurship meets academic excellence, combined with far-sighted industrial policy. Silicon Saxony is Europe’s biggest microelectronics cluster and the fifth biggest worldwide. One in every three chips made in Europe is produced here. The region offers near-perfect conditions for us, as a highly valued ecosystem is already in place, consisting of supply chains, talents, resources, as well as successful research and academics. All this will make the single biggest investment in the company’s more than 130-year history successful in the long run.’

What about its labour market? Is the region attractive enough for the knowledge workers that are needed? You currently employ around 450 staff? How many are still needed?

‘Bosch currently employs around 500 semiconductor experts in Dresden. Numerous skills are required to grow the semiconductor ecosystem over the next decade: from engineers to design chips and the actual tools that produce the chips, engineers of various disciplines in the fabs themselves, as well as trained professionals in marketing, sales and management who understand semiconductor technology. Signs are that demand has picked up in some areas of the local labour market. However, in my experience, Bosch enjoys a high level of employer attractiveness among applicants. In the future field of semiconductors, we offer a wide range of tasks and development opportunities, not only in microelectronics, but also in software, especially in big data analytics and artificial intelligence. We therefore rely on and recruit the expertise of highly qualified specialists worldwide. I’m particularly proud of our new dual education programme for microtechnology, mechatronics and computer science, which is set to start in Dresden in August 2024.’

‘Our active participation in research collaborations makes Bosch an important player in international research, development and innovation networks. Local collaboration with universities with an international reach and highly trained students is an important pillar for recruiting future talents. In Dresden, proximity to the Technical University, the other Saxon Universities, as well as the considerable number of research institutes (such as Helmholtz Societies and Fraunhofer Institutes) attracts young graduates and specialists for our semiconductor plant and experienced semiconductor experts.’

How important is the presence of partners, competitors and suppliers? Which ones are particularly important and why?

‘The Silicon Saxony microelectronics cluster offers location advantages for our fab. We benefit from the fact that many equipment suppliers from all over the world, the US and Asia in particular, plus technology partners, are present in the region. This includes companies from automotive supply, services and other industries, as well as universities and research institutes offering technological expertise. The infrastructure in Dresden is excellent. Everything is easily accessible with plenty of public transport connections. This facilitates negotiations, meetings and on-site visits, especially when support is needed in short notice.’

 Is Bosch Semiconductor Manufacturing satisfied with the availability and accessibility of public funds and tax cuts, in Saxony, nationally and in Europe (Important Project of Common European Interest on Microelectronics, IPCEI ME, eds.), compared with other regions in the world where it operates (e.g. California and Asia)?

‘The European chip industry’s global success and competitiveness are strongly linked with the ability to offer competitive advantages that can make the region suitable as an industrial location, such as reduced bureaucracy, a safe and affordable energy supply, globally diverse supply chains, investment in home-grown talents and smart subsidy programs to name just a few prerequisites. If we get this right, Europe has a good chance of becoming a key player in the global industrial chip ecosystem. This is because Europe benefits significantly from a robust research and innovation network and global players like Bosch with strong connections and partnerships, thus underlining the capabilities of a European company on a global scale. Overall, Europe’s innovation efforts place a strong emphasis on human-centric, society-driven technological developments, prioritising ethics, privacy, security, protection of individual rights, as well as strong considerations for environmental protection and sustainability.’

‘Compared to the US, however, European over-regulation and red tape are holding back productivity growth, while fragmented capital markets impede efficient funding. This makes doing business in the Eurozone more challenging. After the EU parliament elections in June, Europe’s top priorities should be reducing red tape and over-regulation, re-igniting efforts to further embed the capital markets union, tackling issues that hold back the speedy and timely absorption of EU funds and pushing forward a strengthened European industrial policy to cool down the race for subsidies among EU countries.’

Europe got its Chips Act and some EUR 43 billion that comes with it. Is that enough for (re)gaining a 20 percent market share in the global semiconductor market?

‘We welcome the Commission’s European Chips Act as an important step towards strengthening the competitive semiconductor ecosystem in Europe, as it gives a strong signal to the world that Europe is open for business. It’s crucial that EU institutions continue to promote globally competitive semiconductor funding opportunities on both a European and national level. If Europe wants to achieve its target of a 20-percent market share, European momentum and production capacity must be increased at least four-fold. It’s obvious that the major investments committed to until 2023 alone will not be enough to achieve this. On the contrary, if the level of investment and capacity announced for 2023 is maintained, the global market share of chips produced in Europe is at risk of falling in the second half of the decade onward.’


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Is the EU semiconductor strategy sufficiently clear about the focus the European semiconductor industry should have and on what parts of the different value chains?

‘The EU semiconductor strategy focuses on the technologies that are expected to be required by the European core industries of the future. We need to achieve a certain level of European technological sovereignty in the semiconductor industry to be able to sustain our prosperous economy and wealth within a strongly competitive global environment. So it’s not only about manufacturing at the largest scale, but also and especially about achieving industrial deployment at scale first in order to be future proof. Research and innovation funding of novel chip materials, designs or software and ultimately also strengthening the European consumer markets, diversifying supply chains and growing our talent base are just as crucial to ensure the sustainable influence and impact of every European investment for decades to come.’

 The Bosch Semiconductor Manufacturing strategy is focused on automotive and IoT. Are there any (major) shifts to be expected? What investments are in the pipeline?

‘The main European markets for semiconductors are automotive, industrial and IoT. Bosch continues to focus on specialty semiconductors with high differentiation potential, e.g. MEMS sensors, Application-Specific Integrated Circuits (ASICs) and power semiconductors based on the innovative material silicon carbide (SiC, eds.).’

‘Bosch is consistently investing in the development of semiconductor technologies and is continuing to expand its global manufacturing network. Over the next years, we plan to invest some EUR 3 billion in Dresden and Reutlingen, both as part of our own investment plan and under the European IPCEI ME funding programme. In addition, we plan to jointly invest with TSMC, Infineon and NXP Semiconductors in the European Semiconductor Manufacturing Company (ESMC) GmbH in Dresden to provide advanced semiconductor manufacturing services. A total of 70 percent of the planned joint venture will be owned by TSMC, with Bosch, Infineon and NXP each holding a 10 percent equity stake. Total investments are expected to exceed EUR 10 billion. As a minority shareholder, Bosch’s 10 percent share allows to secure capacity for its customers in these smaller technology nodes in Europe at an early stage.’

‘Following our acquisition of a wafer fab in Roseville, California, we plan to invest more than USD 1.5 billion in upgrading the fab to support the latest manufacturing processes for silicon carbide semiconductors. Bi-partisan opportunities such as the IRA, CHIPS and Science Act, among others, provide a positive framework for local investments. Bosch actively reviews and pursues incentive opportunities as part of its regular business strategy. We intend to apply for government support through the CHIPS and Science Act to support semiconductor technology.’

‘Moreover, we are targeting a EUR 350 million investment in Malaysia halfway through the next decade. In August 2023, we opened a new test centre for chips and sensors in Penang at a cost of some EUR 65 million and we plan to invest a further EUR 285 million at the site halfway through the next decade.’



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