With more than 500 affiliated semiconductor companies, Silicon Saxony, the region around Dresden, is the largest microelectronics hub in Europe. And the cluster will grow significantly in the coming years, because the world’s major chip producers will add large fabs to their existing capacity. This with financial support from, among others, the European Union. Attracting sufficient staff is the biggest challenge, according to cluster director Frank Bösenberg. He also points to the lack of a broadly supported European strategy, which is still absent. Cluster participant Infineon refrains from commenting on ‘Brussels’ when asked.
‘Doing things twice means not enough money for distinctive technology development’
Taiwanese TSMC will build a chip factory worth EUR 10 billion (in a joint venture with Robert Bosch, Infineon Technologies and NXP Semiconductors) and the American Intel company has plans to invest more than EUR 30 billion in two plants. In addition, Infineon is investing EUR 5 billion in a new factory. When asked about the status of these plans, Frank Bösenberg, managing director of the cluster organisation Silicon Saxony, states that everything is on track. ‘Both companies are expected to start their construction works in Q4 of this year. The start of production in the TSMC and Intel fabs is planned for 2027. Infineon is already underway and aims to be operational by 2026.’ The German state is investing no less than EUR 16 billion in just those three new fabs alone.
Distinctiveness in scale
What sets his region apart, Bösenberg explains, is the scale mainly. ‘Other regions, such as those in Austria or the Netherlands, also account for a considerable part of the semiconductor value chain. Here we are not talking about just one or two fabs, but as many as five. Plus the surrounding ecosystem. We also distinguish ourselves thematically, both in Europe and worldwide: the quality in the field of semiconductors for the automotive, factory automation and power electronics is unparalleled here, even on a global scale.’
Labour migration needed
Frank Bösenberg expects his cluster to grow considerably in the coming years. This is primarily due to the construction of new factories by Intel and TSMC as well as expansion investments by Infineon, GlobalFoundries and Bosch. In terms of jobs, it is set to rise from 76,000 FTE to 100,000 and 114,000 FTE. The region itself will only be able to supply some of the employees, as many will have to be sourced from elsewhere in Germany, as well as from other EU Member States and beyond. To recruit these workers, the image of the region still needs some polishing, he realises. ‘Labour immigration will be necessary. The fact that the Alternative for Germany party opposes immigration does not help the country’s image as a destination for international skilled workers. On the other hand, Saxony’s high-tech companies managed to attract all required international workforce until today.’ And, unlike in the Netherlands, space is not an issue: ‘After the unification of Germany, many people left here for western Germany, because there was no work in the east. Only a few years ago, this was seen as an ageing region experiencing population decline. So we have enough space to build here, fortunately we don’t have that Dutch problem. Living and working here is really attractive. Yet being able to attract the right people starts with having the best possible image. That is our main challenge.’
Largest cluster, big benefits
Raik Brettschneider, managing director of Infineon Dresden, points out the major advantages of the largest microelectronics cluster in Europe, which will only be further enhanced with the planned expansion of the plant there: ‘Silicon Saxony offers a broad ecosystem of suppliers and partners along the entire microelectronics value chain. We’re keen to capitalise on that and we regularly cooperate with local universities, R&D organisations, and SMEs in joint research projects in the area of product development and manufacturing processes. And, many qualified specialists already live in Dresden. In addition, the administration is familiar with the industry which helps a lot in administrative processes. Summarising, the expansion of production capacities at the existing Dresden site helps Infineon to leverage the benefits of the Silicon Saxony cluster and to generate considerable effects of scale.’
He is confident about the challenge of attracting enough people for the expansion: ‘The Smart Power Fab will create approximately 1,000 highly qualified jobs. We’re confident that we will be able to hire qualified staff in sufficient numbers.’ Albeit that finding expert staff for the planned European pilot lines requires that they are implemented in close cooperation with the industry involved in order to successfully drive forward the path from lab to fab.’
Member States do not work together enough
Further strengthening Silicon Saxony and the other European semiconductor hubs is not possible without proper mutual cooperation between the countries involved and Frank Bösenberg is not entirely satisfied with this. ‘In Silicon Europe, we work well together with the other large clusters such as Silicon Alps and Hightech NL. We’re increasingly successful in closely integrating each other’s activities in a single integrated value chain. Although a well-thought-out and broadly supported European strategy is still lacking, despite the European Chip Act and its stated target of a 20 percent share in the global semiconductor market.’ In his view, the politics of EU Member States are still too pre-occupied with ensuring that their investments are mainly made within their own borders and not beyond. ‘Smaller countries like, say the Czech Republic, therefore never really had a fair chance in attracting the real big projects like Intel or TSMC. Now partly things are even being done twice without enough money being available for distinctive technology development. Large bilateral French-German development projects, for example, don’t exist.’
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Ensuring that ASML remains European
A coherent European semiconductor strategy, which the US and China have, but the EU still lacks, must be clear about exactly which parts of the semiconductor value chain to focus on. ‘Which parts of the front-end, which parts of the back-end. To ensure that such an essential link as ASML in that value chain is protected and remains truly European. By doing so, you create the control points that we need to have something to exchange on a global scale and be able to discuss with the US and Asia on eye-level when it comes to chips.’
Open mind
When asked about his opinion on the accessibility and availability of public funds and tax benefits in Saxony, Germany and Europe, compared to those in the US and Asia, Infineon’s Brettschneider keeps an open mind. ‘In 2023, the European Commission approved the IPCEI Microelectronics and Communication Technologies (IPCEI ME/CT, eds.), paving the way for the funding of around 100 European projects. Infineon welcomes this approval. Under this European innovation programme, Infineon will invest more than EUR 2.6 billion in Germany alone by the end of 2027 in projects that drive decarbonisation and digitalisation, and will develop advanced chip technologies, as well as novel front-end and back-end manufacturing processes at its sites in Dresden, Munich, Regensburg and Warstein.’
Production alone is not the holy grail
Infineon is not particularly critical of the European Chips Act as an instrument to increase the share of the global semiconductor production market from less than 10 to 20 percent: ‘It’s an important step towards establishing a semiconductor ecosystem in Europe with a global leading-edge level, while decreasing unilateral dependencies.’ Only to point out that pursuing one-fifth of global chip production alone is not the holy grail: ‘Research, chip design, software and ultimately also the strengthening of the European consumer markets, supply chains and semiconductor demand are just as important when it comes to ensuring the sustainability of investments.’
