ON Semiconductor Corporation (onsemi), an American chipmaker, plans to invest up to $2 billion in expanding its Czech manufacturing.
On Wednesday, Onsemi and the Czech government announced a fresh investment in the company's current production in Roznov pod Radhostem.
The investment is the largest in the country since the breakup of Czechoslovakia in 1993.
Czech Prime Minister Petr Fiala stated that the investment will increase the plant's current output of 10 million chips per day.
The corporation, located in Scottsdale, Arizona, stated that the number of employment produced in Roznov will expand to 3,000 from the existing 1,700.
Onsemi intends to establish a silicon carbide manufacturing plant that will increase the efficiency of semiconductors, which are crucial computer components.
“The expansion would also enhance our production of intelligent power semiconductors that are essential to helping ensure the European Union is able to achieve its ambitions to significantly reduce carbon emissions and environmental impact,” said onsemi president and CEO Hassane El-Khoury, in a press release.
Onsemi provides semiconductors for electric vehicles and driver assistance systems such as cameras and sensors. Its silicon carbide chips also aid to increase the range of electric cars.
The Czech Republic, home to Skoda Auto, which is now controlled by Volkswagen, sees the plant as a boost to its electric car production. Volkswagen is the country's largest exporter and a major collaborator with Onsemi.
“This investment not only strengthens our position in the semiconductor field but can also contribute to the development of the automotive industry and help us with its adaptation to the rise of electromobility,” said Jozef Síkela, the country’s trade minister.
According to the news release, Onsemi is "one of the only companies in the world" capable of producing silicon carbide-based semiconductors. Silicon carbide is a "critical material for high-power, high-temperature applications and is extremely difficult to produce," according to the statement.
Silicon carbide chips are more expensive than regular silicon chips, yet they are preferred by automakers due to their energy efficiency, lightweight, and durability.
Simon Keeton, the head of Onsemi's power solutions group, stated that production from the increased investment might begin in 2027.
“With this investment, the company would contribute to the strategic positioning of the region within the EU’s semiconductor value chain and demonstrate that all EU countries can benefit from the European Chips Act,” Onsemi said.
The Czech Industry and Trade Ministry stated that public help might amount to up to 27.5 percent of total investment. According to the ministry, the incentive should be authorized, including notice to the European Commission, by the first quarter of 2025.
The investment falls within the company's capital expenditure plan and comes after it announced last week that it will reduce about 1,000 jobs from its 30,000-strong staff.
Onsemi has had a slow recovery in chip demand due to a poor electric car industry and surplus inventories among its customers.
The onsemi investment in the Czech Republic comes as worldwide semiconductor production is predicted to reach a trillion dollars by 2030, up from $600 billion in 2021, according to consulting company McKinsey.
The Semiconductor Industry Association predicts that domestic chip production in the United States will rise by 200 percent in the next ten years.
The investment follows similar initiatives by STMicroelectronics (also for silicon carbide chips) in Italy, as well as Intel and TSMC in Germany.
Plans to develop an STMicroelectronics facility in Catania will cost $5.4 billion and include a direct government funding of around 2 billion euros.
Intel is to spend 30 billion euros on two chip facilities in Germany, including significant government subsidies. Germany has already offered up to 5 billion euros to TSMC's $11 billion Dresden facility, according to German officials last year.
