Bosch to Invest EUR 3 Billion in Chip Production by 2026

Technology group Bosch will invest EUR 3 billion (roughly Rs. 24,020 crore) in chip production by 2026, including in opening two new development centres and expanding its wafer factory in Dresden, the company said on Wednesday.

The investment, for which Bosch will seek European Union funding under the Important Projects of Common European Interests (IPCEI) framework, should boost Europe's production capacity for chips in a global market still dominated by US and Asian players.

"Europe can and must capitalise on its own strengths in the semiconductor industry," said Chief Executive Stefan Hartung. "The goal must be to produce chips for the specific needs of European industry."

Bosch last year opened a EUR 1 billion (roughly Rs. 8,000 crore) chip factory in Dresden, a record investment as it sought to stake its claim in the growing market for chips to equip self-driving and electric cars amid a global shortage.

A total of EUR 170 million (roughly Rs. 1,360 crore) will go into the new development centres in Reutlingen and Dresden, with EUR 250 million (roughly Rs. 2,000 crore) to be spent on expanding the existing Dresden site.

How the remaining funds will be spent is yet to be decided, Hartung said.

The CEO expects bottlenecks in chip supply, from strained shipping networks to low production capacity, to continue for several more months, even as inflation eases pressure on some parts of the sector by reducing demand for expensive consumer goods.

Bosch's chips need to be shipped from Germany to Malaysia and back again in the production process, meaning any disturbance to shipping could add weeks to delivery times, Hartung said.

"There are areas where certainly demand will fall such that you can order substantive sums at any time.... there are however also areas where not as much capacity was added and demand is still very high," he said.

© Thomson Reuters 2022