ZF Friedrichshafen and Wolfspeed plan to build a $3 billion wafer factory in Germany’s Saarland to make chips for electric vehicles and other applications, a boon for a region dependent on combustion-engine components, according to people familiar with the matter.
The go-ahead for the project is subject to commitments on subsidies amounting to a quarter of the total investment, the people said, declining to be named discussing private information.
ZF will hold a minority share in the factory with its U.S. chipmaking partner, located in Ensdorf near Saarbrücken.
ZF operates its largest factory nearby where 9,000 employees make transmissions.
The plan will see the site of a former coal-fired power plant converted into the world’s largest factory for silicon carbide semiconductors, used in EVs and photovoltaic converters.