Europe's Largest Semiconductor Factory in Germany by 2028

Europe's largest semiconductor manufacturing plant will soon be established in Germany, marking a major strategic turning point for the European microprocessor and electronic components industry. This major project, located in eastern Saxony near Dresden, symbolizes the European Union's commitment to reducing dependence on Asian suppliers and strengthening its technological sovereignty in the critical semiconductor sector.

GlobalFoundries, the American semiconductor manufacturing giant, will invest 1.1 billion euros at its Dresden site, with the goal of producing one million wafers per year by 2028. This expansion represents a crucial step in revitalizing the German region, often called Silicon Saxony, which is progressively becoming the epicenter of circuit integration manufacturing in Europe.

The Dresden region and its surroundings already concentrate several strategic semiconductor production projects. The presence of multiple megafabs in this geographic zone creates an ecosystem favorable to technological synergies and attracting qualified talent. This concentration of investments makes eastern Saxony an undeniable center of excellence for continental microelectronics.

Financing these projects largely relies on the European Chips Act, the European Union aid plan that mobilizes 43 billion euros to revitalize semiconductor production on the continent. This aid mechanism guarantees the financial viability of the massive investments necessary for building and commissioning modern factories. Germany, as the economic engine of Europe, benefits from a substantial share of these strategic subsidies.

The underlying geopolitical stakes are considerable. The COVID-19 crisis exposed the fragility of the global semiconductor supply chain, causing prolonged freezing of European automotive production. Since then, Sino-Taiwanese trade tensions and dependence on external suppliers have deeply concerned European institutions. Establishing performing production plants on European Union territory provides a layer of protection against these geopolitical risks.

The European Union ambitiously aims to produce 20 percent of global semiconductor capacity in the coming years. This technological sovereignty objective requires unprecedented investments and strong political coordination. National governments, particularly Germany, actively support these initiatives by granting substantial subsidies and simplifying administrative procedures.

Semi-conductors are the fundamental components of all modern electronic devices, from automobiles to smartphones, from computer servers to artificial intelligence systems. Their production requires cutting-edge technological capabilities and considerable capital investment. Production facilities, called fabs or megafabs, are complex installations equipped with ultra-precise lithography equipment and sophisticated quality control systems.

Semiconductor production also employs thousands of highly qualified technicians, engineers, and researchers. Establishing large factories in Germany thus drives significant job creation, stimulating the local economy and strengthening regional technical capabilities. Service companies, material suppliers, and research laboratories directly benefit from the network effect created by these major investments.

The automotive and industrial sectors constitute the priority outlets for German semiconductor production. The European automotive industry, particularly in Germany, is heavily dependent on these components for embedded systems, automotive electronics, and autonomous driving technologies. Secure and reliable local production therefore represents a major competitive advantage for traditional automakers and new electric vehicle manufacturers.

The production capacity of these plants is generally expressed as the number of wafers processed per unit of time. A wafer is the silicon wafer on which integrated circuits are engraved. Modern German plants process very large wafers, allowing the simultaneous production of multiple chips. This economy of scale makes German plants competitive despite higher labor costs than in Asia.

Semiconductor manufacturing technology progresses continuously according to an empirical law known as Moore's Law. Engraving nodes regularly decrease, allowing the production of more powerful and more energy-efficient chips. German factories integrate the most advanced technologies to ensure long-term competitiveness of European production.

The production equipment sector also holds strategic importance. Dutch company ASML dominates the global market for extreme ultraviolet lithography, technology essential for the finest nodes. Americans Applied Materials and KLA Tencor are also key suppliers. Germany also hosts specialized equipment manufacturers who directly benefit from the expansion of local production capacity.

Environmental challenges accompany semiconductor industrial growth. Wafer production requires significant quantities of ultrapure water and energy, raising sustainability questions. Modern German plants nevertheless integrate advanced water treatment systems and energy efficiency solutions, aligning with European ecological transition objectives.

Taxation and regulation also play a decisive role. Germany offers a stable regulatory framework and attractive tax advantages for massive investments in semiconductor manufacturing. Legal certainty and the quality of public infrastructure facilitate the establishment of these complex plants on its territory.

Education and training constitute essential pillars for long-term success. German universities, particularly those located in Saxony, develop specialized training programs to meet the needs of microelectronics industries. Technical schools also prepare a new generation of qualified technicians.

Future prospects for European semiconductor manufacturing appear promising. Continued investments, political support, and mobilization of technological resources make Europe an undeniable player in the sector. Europe's largest semiconductor plant represents far more than an isolated industrial installation; it symbolizes the continent's collective determination to master its critical technologies and shape its economic independence.

Sources:

• Clubic, "Europe's largest semiconductor plant will be established in Germany"

• Science Germany, "Construction of a semiconductor factory in Dresden: The European Union grants funding of several billion euros"

• Usine Digitale, "Semiconductors: EU validates 920 million euro funding for German Infineon plant »