Bosch to invest another $467 million to boost chipmaking capacity

German technology and parts supplier Robert Bosch GmbH will invest another €400 million ($467 million) to expand its chip manufacturing facilities in response to the ongoing semiconductor shortage that has wreaked havoc on the production of everything from vehicles and appliances to personal computers and power tools.

The boosted expenditure, which is earmarked for 2022, will go toward expanding operations at the company’s wafer fabrication plants in Dresden and Reutlingen, Germany, and its semiconductor component facility in Penang, Malaysia. The majority of the funds will be used to increase manufacturing capacity at the Dresden site, which the company opened in June at a cost of €1 billion ($1.2 billion), the single largest investment in its history. That facility produces 300-millimeter wafers, a larger size that yields more individual chips per wafer.

Around €50 million will be spent in Reutlingen in both 2022 and 2023, where the company has been making semiconductor components since 1970. There, Bosch will expand its “cleanroom” — a specially engineered environment where the silicon wafers are made into semiconductor chips — by more than 4,000 square meters (about 43,000 square feet), to a total of 14,500 square meters (156,000 square feet). The expansion will also create 150 new jobs, according to Bosch.

In Penang, Bosch will construct a new semiconductor test center, which will enter operations in 2023. The test center will take up around 14,000 square meters (150,696 square feet) initially. However, the company has the space — more than 100,000 square meters — on the Penang strip, and plans to eventually develop all of it.

The huge investment comes during a protracted semiconductor shortage that automotive executives and industry analysts forecast will extend into next year. Executives from both Ford Motor Company and General Motors told investors in their respective third-quarter earnings calls this week that they foresee the shortages persisting into 2022, and possibly even 2023.

It’s a sensible move for the company, which not only supplies automakers and other companies, but also uses its chips in-house for products such as Bosch power tools. It’s also good news for the European Union, which aims to increase domestic supply chain resilience by boosting the production of semiconductors in the EU to one-fifth of the world’s supply by 2030.