Wolfspeed has delayed its$3 billion chip plant project in Germany, highlighting the European Union's challenges in boosting semiconductor production. Originally set to begin construction this year, the plant in Saarland is now postponed to mid-2025. Wolfspeed, under pressure from an activist investor due to a significant drop in stock value, is focusing on ramping up production in New York instead.

The delay reflects broader issues within the EU's efforts to enhance its semiconductor industry through the 2022 Chips Act, which aimed to raise E43 billion. Despite ambitious plans from companies like Intel, TSMC, and Infineon, many projects have yet to receive necessary EU state aid approval, crucial for their financial viability. The region's goal to capture 20% of the global semiconductor market by 2030 appears increasingly unattainable.

Why does it matter?

Germany, a major player in these plans, faces a budget crisis, casting doubt on its infrastructure commitments, though officials claim semiconductor funding remains secure. Meanwhile, European political shifts could threaten support for key projects, complicating efforts to reduce reliance on Asian chip producers. Despite these setbacks, some projects, like TSMC's in Dresden and STMicroelectronics' plant in Italy, are progressing with the EU approval and ongoing construction.