German auto parts giant ZF has pulled out of a billion-dollar project with a microchip-only factory in Germany. The company must save an awful lot of billions.
The car giant ZF has decided to withdraw from a planned microchip factory project in western Germany, which was to be realized in collaboration with the American chip manufacturer Wolfspeed.
The project, estimated to cost the partners $3 billion, now faces an uncertain future.
According to industry sources, the decision to halt the project comes after Wolfspeed chose to put plans on hold. The background to this shelving is a lower than expected demand for microchips, also called semiconductors, and doubts about the value of Wolfspeed's entry into the European market.
ZF had previously committed to invest 185 million dollars in the factory, which should have produced chips for electric cars.
The project was announced in February 2023 and included both a factory and a research and development center in the German state of Saarland. If the project is abandoned altogether, it will be a further blow to Germany's ambitions to attract international investment and promote the country as an attractive business destination.
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In connection with recent media reports pointing to ZF as the reason for the delay of the project, the company has denied this.
"Wolfspeed has overall responsibility for the project. ZF has always provided intensive and active support," a ZF spokesman said in an email, but ZF declined to comment on the decision to withdraw.
This is reported by Reuters .
Representatives from Wolfspeed and the German Ministry of Economy have also not wished to comment on the matter.
Demand for electric wagons has developed more slowly than expected, which has put ZF under financial pressure.
The company has already announced plans to reduce its workforce in Germany by 25% by 2028 and has also lowered its expectations for future earnings. At the same time, up to DKK 44 billion in savings must be found. Read more about it here .
Wolfspeed already postponed its plans for the factory last year, as the financing was not yet in place. According to the company, construction was expected to begin in mid-2025 at the earliest.
However, despite the current challenges, Wolfspeed has not definitively shelved the project and remains focused on increasing production at its US factory in New York after cost savings were implemented as a result of the weakness in both the European and US markets for electric cars.
The challenges facing this project are not unique. Several semiconductor manufacturers, including Intel, have also delayed their plans to set up new factories in Europe.
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