It may take years before we emerge from the ongoing semiconductor shortage, but there may be some hope on the horizon, at least for German and European automakers. Bosch today announced the opening of a $1.2 billion 300-millimeter wafer fab based in Dresden, Germany.

While Bosch is far from the largest chipmaker in the world, the company is no stranger to the highly competitive business either. The company has been supplying microelectronics to automakers going back to the 1950s, and has operated its own foundry business since the 1970s.

The foundry will initially produce electronic components for Bosch power tools beginning in July, but by September will transition to producing silicon for the automotive industry, a segment badly bruised by the ongoing shortage. According to Bosch, each 300-millimeter wafer will accommodate as many as 31,000 individual chips.

“The new wafer fab is good for Europe, for Germany, and for Saxony. Directly and indirectly, it means many new jobs in a huge growth industry,” Michael Kretschmer, Minister-President of the Saxony region, said in a statement.

Construction on the facility began in June 2018, in a bid to address the surging demand for semiconductors, “as well as a renewed demonstration of its commitment to Germany as a high-tech location,” Bosch said. To this end, funding for the facility was provided by Germany’s Federal Ministry for Economic Affairs and Energy.

The foundry opens today with about 250 employees, but Bosch claims that number will swell to as many as 700 employees once the facility reaches full production capacity.

The Bosch foundry makes “a lot of sense” due to the high demand for silicon among automakers, said Wayne Lam, senior director of research, Americas at CCS Insight, in an email to SDxCentral.

The “Dresden location is close to existing silicon ecosystem —both Infineon and Globalfoundries have 300-mm fabs there – [and] should spur on more investments from other silicon firms,” he wrote. “I guess the term 'Silicon Saxony' will be tossed around a lot.”

A side effect of the semiconductor shortage has been a shift to nationalized semiconductor production, either on national security or economic grounds.

“The new Bosch wafer fab will boost our capacity in microelectronics. Microelectronics is the basis for nearly every promising technology, for applications of artificial intelligence (AI), for quantum computing, and for automated and connected driving – which is also a Bosch specialty,” said German Chancellor Angela Merkel, in a statement. “The new wafer fab is the single largest investment in the company’s history."

The Dresden facility’s opening follows ongoing discussions between European leaders and top foundry operators to expand their presence in the region.

“EU regional silicon fabrication is top of mind for governments and this checks all the boxes,” Lam said of the Bosch foundry opening.

In April, representatives from Intel, which only recently opened its foundries to contract manufacturing, and Taiwan Semiconductor Manufacturing Co. (TSMC), the world's foremost foundry operator, met with European Commissioner Thierry Breton to discuss opening facilities in the region.

And like the Bosch facility, which received significant subsidies from the German government, Intel is looking to EU leaders to pay up for silicon independence, reportedly to the tune of $10 billion. However, Intel has denied these figures and has yet to formally announce any construction plans in the region.

TSMC is also looking to expand its foundry operations with significant weight given to expanding its geographic footprint. The company has already begun construction on a $12 billion foundry in Arizona and now pans to spend an additional $100 billion on foundries over the next several years.