Wolfspeed, a US-based silicon carbide (SiC) semiconductor manufacturer, is set to build a chip factory in Germany, Handelsblatt reports. This is an important step for both the country’s green mobility and the European chip industry.

According to the newspaper, the facility, worth more than €2 billion, will be located on a site in the southwest of Saarland. Series production is expected to start in four years.

German car supplier ZF acquires a minority interest in the factory, but becomes a majority shareholder in the associated research center.

Wolfspeed’s decision to build a factory in Germany is a boost for the domestic auto industry, especially when it comes to electric vehicles. Although silicon carbide (a compound of silicon and carbon) is more expensive than conventional silicon, SiC chips are being considered more promising: They can extend EV range, shorten charging time and reduce operating costs thanks to lower energy consumption.

And with the factory in close proximity to Germany’s (electric) car production sites – think BMW, Ford, Mercedes and Volkswagen – manufacturers can hope for easy access to the supply chain.

Wolfspeed’s factory is also good news for Europe struggling with chip production – currently good for 10% of the world market. The continent’s weakness was particularly apparent during the pandemic, as supply chains collapsed and it struggled to secure chip access, causing entire industries to sputter.

In response, the EU has sought to improve its domestic production capacity. First and foremost comes the European Chip Actaiming to stimulate a local semiconductor industry and boost the block’s global market share to 20% by 2030. The Union has also tried to attract global players to build factories on the continent such as Intel’s €68 billion investment on a site in Germany and now Wolfspeed.

Europe may only be at the beginning of its plans to become a major chip producer, but there is reason to hope.