The money to catch up does not flow

Munich Silicon carbide is the chip material of the future. Electric vehicle manufacturers are competing for innovative materials. Only one thing is slowing the faster spread of semiconductors: They are at least twice as expensive as traditional silicon components.

Michael Robb wants to change that. With the start-up of the mi2 plant, the professor wants Jena to reduce production costs by 30 percent as a first step. In the long term, the 54-year-old believes it is even possible to cut the price in half. That would be a boon for the European chip industry. Silicon carbide semiconductors (SiC) is one of the few areas of the industry where Europe is still world class.

But the physicist has to solve one problem beforehand: He needs two millionths to make a prototype of his chip machine. In light of politicians’ announcements of saving billions for the chip industry, large government funding shouldn’t be a problem — Rob thought.

Brussels and Berlin have announced significant support in recent months, but it remains unclear when and how much money the mi2 factory can expect. “To this day, we don’t even know how high the funding rates are,” says the founder angrily.

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Many chip companies and their customers are disappointed with the policy. The catch-up in Europe threatens to delay before it begins. Even major semiconductor manufacturers privately complain that government aid is long overdue and that award rules tend to delay rather than speed up innovation.

A high-income Dax group like Infineon, Germany’s largest chip group, could do without government financial aid – even if companies at the time were disadvantaged compared to competitors from Asia. On the other hand, a young company like mi2-factory with only seven employees may fail so far, if there is no support.

The European Union has set itself ambitious goals. Through a large-scale financing programme, the Chip Act, Europe will double its share of global semiconductor production by 2030 – to 20 percent. Commission President Ursula von der Leyen presented the plan at the beginning of the year.

The law is an industrial political attack, through which the European Union wants to compensate for Europe’s deficit in other regions and reduce dependence on Asia. In order to achieve this goal, Brussels wants to interpret the previous strict rules of state aid in a more liberal way. 43 billion euros of public funds to flow.

Only companies have yet none of them. The so-called IPCEI program looked particularly promising for Rob. It means “an important project of common European interest”. Generous aid criteria apply to these projects. So EU countries can promote it very comprehensively.

mi2-factory is at the heart of chip production

Robb’s team has developed a technology for so-called doping, a process essential in chip production. Foreign atoms are introduced into a base material, in the case of the mi2 plant, this is silicon carbide. This allows the conductivity or dielectric strength of the power semiconductors to be modified.

The process the company uses is the implantation of high-energy ions. Thuringian experts have combined this with what they call a power filter for the first time. This makes the process more precise, enabling the use of smaller semiconductors and new types of innovative components and substrates, thus reducing costs.

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Originally, Rüb only wanted to produce the filter itself with the company that was founded in 2016. “It took us a while to realize we had to build a complete machine,” says the entrepreneur. In order to operate the first system from a machine maker, Rüb now needs fresh money from financial investors. How high this amount should be depends entirely on what the state ultimately offers. Lord complains that it is difficult to conduct serious negotiations in light of the impasse.

Domestic chip startups are very important to the German economy as a whole and to established chip manufacturers in particular. This is evidenced by the examples of Infineon and Bosch. In 2016, the US government prevented Infineon from acquiring its American competitor, Wolfspeed, which specializes in SiC. The takeover puts national security at risk, it was argued in the justification.

In order to make progress in the strategically important growth area of ​​SiC, the Dax Group bought Siltectra from Dresden two years later for €124 million. The company, which was eight years old at the time, focused on cutting chips from innovative materials.

In turn, auto supplier and chip manufacturer Bosch acquired Dresden-based start-up Arioso this spring. The Saxons developed small loudspeakers based on MEMS (Microelectromechanical Mechanical Systems). Bosch uses this technology for its important sensor business. In addition to SiC, sensors are another area in which Europe can still compete with chipsets from Asia and the USA.

>> Read here: Silicon carbide: chip companies are investing billions in materials of the future

The Confederation of German Industry (BDI) is therefore urging the EU to make a quick decision on which projects will be funded through IPCEI. According to a position paper just published, the approval process and the allocation of funds should be accelerated at an early stage. Industry associations such as Silicon Saxony or the Association for the Electrical and Digital Industry (ZVEI) are also calling for more speed.

The demand for chips is increasing dramatically

“We are seeing a huge increase in demand for chips,” says ZVEI General Manager Wolfgang Weber. An eight percent increase per year can be expected in all semiconductors, with the power semiconductors – to which SiC chips belong – two times higher.

Founder Rüb doesn’t anticipate a funding decision until the fourth quarter at the earliest, perhaps not until the beginning of 2023. The first machines could then be in chip mills in three or four years. After all, the first companies in Germany now have approval from the federal government to start IPCEI projects at their own risk. That’s a good sign, semiconductor group Infineon On Demand said. According to the previous rules, existing projects were not funded. However, mi2 factory doesn’t help much, as the startup needs money from the state to get started.

If the technology proves itself, there should be no shortage of orders. This is because SiC chips allow electric vehicles to have longer ranges, and are also more compact than conventional chips. Infineon has just announced plans to build a new SiC semiconductor plant in Malaysia. “We’re in the right market at the right time,” Rob says. Correct support is still missing.

more: Mobile communications: why Qualcomm is running a factory in downtown Munich.

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