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Chinese-Owned Nexperia Invests $200 Million in German Chipmaking Facilities

Leading worldwide producer of fundamental semiconductors including diodes and transistors, Nexperia, revealed on Thursday that it will invest $200 million in further developing its Hamburg, Germany-based main manufacturing plant. With this large investment, Nexperia hopes to boost its European operations while increasing its German location’s capacity.

A Special Investment Devoid of Government Funding

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With its main office in the Netherlands and possessed by the massive Chinese electronics company WingTech, Nexperia is investing a significant sum of money without depending on government grants thanks to the European Union’s Chips Act, which went into effect in 2023. This action is especially noteworthy because it’s one of the rare times that significant semiconductor investments in Europe happen without official government assistance.

At present, the European Union is investigating if China is wrongfully profiting from its domestic manufacturing of “legacy” chips, that serve as essential parts used in automobiles and home appliances. Nexperia is also the manufacturer of these chips, which emphasizes the importance of the organization’s investment in Germany.

Improving Vital Technologies

The digital revolution, green energy, and electric cars all rely significantly on semiconductors such as those made by Nexperia. According to the chief financial officer Stefan Tilger, they are the nuts and bolts that contribute to making new technologies possible, underscoring the essential significance of their products. With a yearly output of 100 billion chips and nearly a fifth of the world’s supply, Nexperia has an enormous manufacturing scale. After producing in Europe, the organization integrates and packages its goods in Malaysia, China, and the Philippines.

Handling Regulatory Obstacles

Following WingTech’s $3.6 billion acquisition of Nexperia in 2018, the European authorities have been closely monitoring the company. The British government ordered Nexperia to sell a Newport factory in 2022 because of safety issues. In a similar way in 2023, the Dutch government authorized Nexperia’s takeover of the firm Nowi following retroactive scrutiny, despite the German government excluding the company from receiving subsidies to produce battery efficiency technology.

Also Read: SoftBank Invests in AI Startup Perplexity at $3 Billion Value

Growing the Production of Advanced Chips

Production lines for two varieties of “wide bandgap” chips composed of silicon carbide (SiC) as well as gallium nitride (GaN) will be established in Hamburg by Nexperia. Because of their increased speed, efficiency, and capacity to withstand extreme temperatures and voltages, these chips are preferred over conventional silicon chips and are therefore essential for modern electrical infrastructure.

Nexperia, which was first separated from NXP, the erstwhile Philips chip division, in 2017, is still a major player in the worldwide semiconductor industry. This $200 million funding for Germany strengthens its standing as a major role in allowing future technology developments and its footprint throughout Europe.

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US Invests $120 Million in Chipmaker to Expand Facility in Minnesota

With the help of a $120 million grant from the US government, Polar Semiconductor will soon be able to greatly increase its production capacity. This money is a component of the $52.7 billion Biden administration commitment to support national semiconductor manufacturing and research. With the help of the funding, Polar Semiconductor will be able to increase its sensor and power chip production capacity in the United States in the following two years.

Specifics of the Award

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The grant was given by the U.S. Department of Commerce, which emphasised the value of sensor and power chips and how shortages caused havoc across several industries during the COVID-19 epidemic. Undersecretary of Commerce Laurie Locascio stated that the aerospace, automotive, and defence industries rely heavily on Polar’s expertise for high-voltage applications. She mentioned that the investment will enable Polar to produce the upcoming generation of semiconductors, enhancing the country’s capacity for production.

Project Expansion and Ownership Shifts

The state of Minnesota will contribute an additional $75 million toward the $525 million expansion project. This cooperative endeavour emphasises how crucial the semiconductor industry is to the state and federal economies. Not to mention, Polar Semiconductor’s ownership structure is changing a lot. At the moment, Allegro MicroSystems owns 30% of the business and Sanken Electric of Japan owns 70%. The recent developments include the plans to invest $175 million to acquire approximately 59% of Polar by U.S. private equity firms Niobrara Capital and Prysm Capital. As a result, Allegro’s ownership will drop to roughly 10% and Sanken’s to roughly 30%, guaranteeing that Polar would be held by Americans to a large extent.

The Semiconductor Industry Context

The Biden administration’s larger plan to strengthen the US semiconductor industry includes this grant. Polar Semiconductor is not the only well-known company that has benefited from substantial funding. Up to $6.4 billion will be given to South Korea’s Samsung to expand its operations in Texas; Intel received $8.5 billion in March; and Taiwan’s TSMC received $6.6 billion last month to improve its production facilities in the United States. Additionally, the Commerce Department has stated that it intends to award Micron Technology a $6.1 billion grant for projects involving local semiconductor factories.

Also Read: Refreshworks Raises €750K to Accelerate AI in Dutch Businesses

Upcoming Prospects

The funds are intended to ensure a strong domestic supply of essential semiconductor components in order to address and prevent future interruptions like those encountered during the pandemic. The final amounts may change while the Commerce Department completes due diligence on all awards that have been announced.

To summarise, the allocation of $120 million to Polar Semiconductor is a calculated move aimed at fortifying the semiconductor supply chain in the United States, promoting creativity, and augmenting the nation’s technological autonomy.