Spending $467 million to expand chip production capacity, Bosch hopes to solve global chip shortage

According to foreign media reports, Bosch said it will invest more than 400 million euros ($467 million) in 2022 to expand the size of its semiconductor factories in Dresden and Reutlingen, Germany. A semiconductor testing center will be established in Penang, Malaysia. As the world’s largest auto parts supplier, the company hopes to increase chip production and solve the global chip shortage.

Volkmar Denner, Chairman of the Board of Bosch, said in a statement: “Customer demand for chips continues to grow at an alarming rate. Based on current developments, we are systematically expanding semiconductor production in order to best support our customers. “

Bosch’s expansion plans come at a time when the auto industry is being hit by a global shortage of chips. A global shortage of chips has led to a sharp drop in global auto production, as well as affecting new vehicle sales and inventories. AutoForecast Solutions estimates that global automakers have cut production of about 9.74 million vehicles since the start of the year due to the chip crisis.

Bosch’s Dresden plant started production in June with a total investment of US$1.17 billion. Bosch said most of the money from the investment will be used to expand the plant to help the plant achieve a faster production rate than originally planned, thereby increasing chip output.

Earlier this year, Bosch also expanded its Reutlingen plant near Stuttgart, which covers 377,000 square feet. Bosch plans to expand the plant further, by an additional 33,000 square feet by the end of 2023.

Bosch also plans to build a semiconductor test center in Malaysia, and said it will start testing chips and sensors in 2023. Bosch said the test center will initially cover about 150,000 square feet and the test facility will be built in stages.

Bosch board member Harald Kroeger said in a statement: “Every chip we produce helps alleviate the current chip shortage.”

On October 16, Jiang Jian, vice president of Bosch China, pointed out that at present, 100 to 200 semiconductor chips are used in traditional internal combustion engine vehicles, and about 500 to 600 in new energy vehicles. In vehicles or new energy vehicles, Bosch can supply only 17 pieces, especially the controller chip, and Bosch still needs to purchase a large amount of outside to meet the demand.

In the past ten years, the 8-inch fab was put into construction in 2010, and the 12-inch fab was completed in Dresden, Germany at the beginning of this year. In terms of packaging and testing, in addition to building packaging and testing in Europe, the first packaging and testing line in Suzhou has increased investment and has been completed.

Jiang Jian also said that the semiconductor shortage may continue until 2022. In July, chipmakers were only able to fill about 20 percent of customers’ orders, and by August, more than half of customers’ orders could not be filled, he said.

Robert Bosch is ranked No. 1 in Automotive News’ 2021 Top 100 Global Auto Parts Suppliers list. In 2020, Bosch’s sales to global automakers were $46.5 billion.

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