Bosch wants to take over a semiconductor producer from California and invest at least 1.4 billion euros in chip production there. This was announced by the Stuttgart-based industrial group on Wednesday. How much Bosch will pay for the manufacturer TSI Semiconductors was not initially disclosed, but the purchase price is included in the 1.4 billion euros, according to a Bosch spokesman. The takeover is still subject to approval by the antitrust authorities, but according to the spokesman, the Stuttgart-based company hopes that it will come before the end of the year.

Roland Lindner

Business correspondent in New York.

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Gustav Theile

Business correspondent in Stuttgart.

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Bosch now wants to convert the Roseville chip factory. From 2026 onwards, the Group plans to manufacture silicon carbide semiconductors on a clean room area of around 10,000 square meters. TSI has more than 250 employees and is headquartered in Roseville, near Sacramento. The company is around 40 years old, will now be integrated into the German group and, according to the spokesperson, will no longer exist in its current form.

3 billion euros by 2026

In addition to Roseville, the foundation company also has semiconductor sites in Dresden and Reutlingen. The factory in southern Germany, where Bosch also manufactures silicon carbide semiconductors, is currently being expanded from 35,000 to 44,000 square meters of cleanroom space. Last year, the Group announced investments totalling EUR 3 billion in the semiconductor business in Europe by 2026.

Silicon carbide is rapidly gaining in importance, not only in the automotive industry. It minimizes energy loss during charging and, compared to silicon chips, enables longer ranges for electric cars, with 6 to 10 percent depending on the company. Some speak of a gold rush, and according to Bosch, the market is growing by just 30 percent a year.

As a result, large sums of money are being invested in production worldwide. The German semiconductor manufacturer Infineon is building a factory in Malaysia for two billion, which will also deal with silicon carbide chips. In the future, silicon carbide chips will also be produced in the factory, which Bosch competitor ZF Friedrichshafen is building together with the U.S. chip company Wolfspeed for almost 3 billion euros in Saarland.

Poker for the subsidies

With its announcement, Bosch now joins a series of companies that explicitly link their investments to the expectation of state subsidies. On the one hand, the company is now considering an investment of 1.4 billion euros, but at the same time says that the final scope of the project will be "heavily dependent" on public aid. Specifically, it mentions the "Chips and Science Act", i.e. the law passed last year to promote semiconductor production, as well as support from the state of California. If the subsidy works as one imagines, the investments could still increase, said a spokesman.

Other companies are also openly playing poker for subsidies. The semiconductor company Intel, for example, did so in similar terms to Bosch when it announced the construction of two chip factories in the state of Ohio last year. He put the initial investment at more than $20 billion, but said the full volume will depend heavily on subsidies from the Chips Act.

The Chips Act in the USA provides for a total of 52 billion dollars in state aid, of which 39 billion dollars are to flow into the expansion of manufacturing capacities and the rest into research projects, among other things. Although there is no upper limit for individual projects, the government expects subsidies to range between 5 and 15 percent of the investment amounts of projects in most cases.

In addition to the Chips Act, the Inflation Reduction Act (IRA), which provides $369 billion in financial aid for environmentally friendly technologies, is also available to companies as another – and even larger – support program. This support package, for example, has led to a series of announcements about the construction of battery factories in the USA.