Stuttgart Bosch is pushing the expansion of its own chip production in Reutlingen. The world’s largest automotive supplier intends to invest an additional 250 million euros in the site by 2025, the company announced. “We are investing against the global semiconductor supply crisis,” said Bosch boss Stefan Hartung, who has been in office since the beginning of the year.
However, Bosch cannot completely escape the current chip crisis. The world’s largest automotive supplier will continue to refrain from building memory chips, microprocessors and microcontrollers. Like all other automotive suppliers, Bosch remains dependent on the chip industry for these standard semiconductors.
The 136-year-old foundation group recently increased its plans for chip production on a quarterly basis. It was only in October 2021 that Hartung’s predecessor, Volkmar Denner, announced that he would invest more than 400 million euros in the expansion of the semiconductor sites in Dresden, Reutlingen and Penang, Malaysia, in 2022 alone. 150 million euros were already reserved for Reutlingen in the package, and now the location will be massively expanded with a total of 400 million euros.
Bosch has been developing and manufacturing semiconductors for more than 60 years, in Reutlingen for more than 50 years. It’s about already established technologies: integrated circuits (ASICs) for motor controls, sensor semiconductors (Mems) – quasi-electronic sensory organs – that are installed in cars and smartphones, and power semiconductors made of silicon carbide, the new miracle weapon in electromobility.
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Addition makes the dimensions clearer: Last year, Bosch opened a new chip factory in Dresden for around one billion euros. The supplier has now invested 1.65 billion euros in the expansion of its chip production within just a few years. The state is contributing more than 200 million euros from its funding pots. For Bosch, its own share is a tidy sum.
Chip giants invest a lot more than Bosch
However, Bosch’s investment is tiny compared to the investment plans of Intel, Samsung and TSMC. A single chip factory of the industry giants usually costs more than ten billion euros. However, the large chip companies are not yet interested in the niche of autochips. Infineon is the market leader here with 13 percent, ahead of NXP with eleven percent. Renesas from Japan, Texas Instruments and ST Microelectronics follow, ahead of Bosch.
>> Read about this: The car chip business is on the verge of a big boom – Europe is particularly benefiting from it
But the Swabians are still the only major automotive supplier to date that manufactures its own chips. Only the Japanese supplier Denso now wants to change that and is investing 350 million dollars in a new chip plant that the contract manufacturer TSMC is building in Japan.
Unlike the rest of the German auto industry, the Bosch leadership knows how to cleverly design chips and build them themselves. “But Bosch also has to produce at competitive prices,” points out car expert Stefan Bratzel, director of the Center of Automotive Management (CAM) in Bergisch Gladbach. As with all car chips, the structures of the Bosch semiconductors are significantly coarser than those of the semiconductors for the latest generations of smartphones and are therefore easier to master.
With the exception of the central on-board computer – as is the case with Tesla – the fastest chips have not yet been required in vehicles. “But if Bosch feels strong enough to play in the autochip industry, the question must be allowed why the Swabians don’t get involved much more?” asks car expert Bratzel. Market leader Infineon invested two billion euros in expanding its capacities last year alone.
In fact, due to the digitalization, networking and automation of driving, experts expect continued strong demand for car chips. In a recent study, consulting firm McKinsey predicts that sales will increase by up to 15 percent every year up to 2030. Their share will rise to 14 percent of the entire chip market by 2030, six percentage points more than last year.
According to McKinsey, semiconductor revenues will triple to around $160 billion.
In addition, double-digit returns can be expected. The driver is the electrification and automation of driving: Last year, for example, car manufacturers bought semiconductors worth an average of 490 dollars for a car with a gasoline or diesel engine. In electric vehicles, on the other hand, the sum was almost twice as high at $950.
>> Read also: Billions for chips – How the EU wants to bring modern semiconductor factories to Europe
In Swabia, the “chip factory” is being expanded stone by stone. At the Reutlingen site, a new part of the building with an additional 3,600 square meters of ultra-modern clean room space is to be built. Overall, the clean room area in Reutlingen is to be expanded from currently around 35,000 square meters to more than 44,000 square meters by the end of 2025. Production on the new premises is scheduled to begin in 2025.
Miracle weapon silicon carbide
The most recent and hottest product of the future are chips made of silicon carbide: the starting material with the chemical formula SiC is twice as expensive as conventional silicon. But the chips made from it generate only half as much heat and consume significantly less energy. This increases the range of electric cars in comparable models by more than six percent.
In addition, the material enables significantly faster charging, especially with 800-volt systems, because the chips do not overheat as quickly. In the age of electric mobility, reducing the charging time is one of the most important new criteria for success in the automotive industry. The power electronics do not have to be cooled as expensively, which in turn saves energy and weight. In the future, hardly any manufacturer will be able to afford to do without these chips.
According to calculations by the French market research and consulting company Yole, the entire silicon carbide market will grow by an average of 30 percent each year up to 2025 to more than 2.5 billion US dollars. The car market is said to account for more than half of this. “Silicon carbide is a very light and also the hardest ceramic material with very good thermal conductivity and very good resistance,” affirms the German electronics industry association ZVEI.
Only two years ago, Bosch announced its entry into silicon carbide chips. At the start of production in December, Bosch expressed its ambition to become the leading manufacturer of silicon carbide auto chips. However, it remains to be seen whether semiconductors will achieve market leadership in this special sub-area of automotive application. Large chip companies such as Infineon, ST Microelectronics, Rohm or Wolfspeed have been active in this increasingly attractive future market for some time.
More: The new Bosch boss only dares to make a cautious forecast