Wolfspeed To Announce New Electric Vehicle Chip Plant In Germany – Sources

German chip supplier ZF Friedrichshafen and U.S. chipmaker Wolfspeed are expected to announce plans on Wednesday to build an electric vehicle chip plant in the Saarland region, according to three sources close to the matter.

German Chancellor Olaf Scholz and Economy Minister Robert Habeck will attend the event, a briefing on where the new chip factory will be built – on the site of a closed-down coal plant.

The chancellery said the event was related to an industrial policy project in the field of microelectronics but did not provide further details.

The project will cost over 2 billion euros ($2.2 billion) and ZF will hold a minority stake, with production to begin in four years, according to German business paper Handelsblatt which previously reported on the plans, citing unidentified sources.

A spokesperson for ZF declined to comment. Wolfspeed was not immediately available for comment.

Governments in Europe are jockeying for new industrial projects amid unease that subsidies on offer in the United States via the Inflation Reduction Act will lure planned investments in Europe across the Atlantic.

U.S. chip giant Intel Corp announced plans last March to build a new chip manufacturing complex in Magdeburg, but is now asking for more subsidies in light of rising inflation, according to media reports.

(Reporting by Andreas Rinke, Victoria Waldersee and Ilona Wissenbach; Editing by Bernadette Baum)