DRESDEN, Germany (Reuters) - German automotive supplier Robert Bosch [ROBG.UL] is launching production of silicon carbide automotive chips, in a move to address the range anxiety that deters many drivers from switching to electric vehicles.

FILE PHOTO: A Bosch logo is pictured in Renningen near Stuttgart, Germany July 29, 2016. REUTERS/Michaela Rehle

Silicon carbide is more conductive than more widely-used silicon, making it possible for the chips that manage the motors in battery-powered vehicles to have higher switching frequencies and to throw off less heat.

“Silicon carbide semiconductors bring more power to electric vehicles. For motorists, this means a 6% increase in range,” Bosch board member Harald Kroeger said on Monday.

Bosch will make the silicon carbide chips at its existing plant in Reutlingen, near its Stuttgart headquarters, executives said at an event to update on progress in building a new, 1 billion euro ($1.1 billion), chip fabrication plant in Dresden.

The Dresden ‘fab’, Bosch’s largest single investment, seeks to build on its leadership in sensor chips used to ensure that smartphone screens show images the right way up, and to activate airbag- or automated braking systems in cars.

Bosch also wants to strengthen its position in so-called Application-Specific Integrated Circuits (ASICs) that decide how to act on sensor inputs; and in power electronics that manage everything from a car’s electric windows to its drivetrain.

TWO-YEAR PLAN

The first production run at the facility in the center of Germany’s high-tech hub known as ‘Silicon Saxony’ is planned for late 2021. The ‘fab’ will employ 700 staff.

It will use silicon wafers with a diameter of 300 mm that make it possible to cram more chips onto a single wafer than existing production methods using diameters of 150-200 mm.

Privately held Bosch, the leading automotive ‘Tier 1’ supplier, is positioning itself as a supplier of the full range of semiconductor products for the electric, connected and self-driving cars of the future.

The average car contains chips worth $370, according to industry estimates, but that figure rises by $450 for emission-free electric vehicles. Another $1,000 will be packed into the future self-driving cars, making semiconductors a growth opportunity in a car industry struggling with stagnant sales.

Throw in $100 for infotainment features, and the typical car will pack more than $1,900 in semiconductors as technology advances and as features now seen only in luxury vehicles spread to mass-market models, Bosch reckons.

Bosch ranked as the sixth-largest supplier on the $38 billion automotive semiconductor market last year with a share of 5.4%, according to Strategy Analytics.

The market leader was NXP on 12%, followed by German competitor Infineon on 11.2%. Infineon already runs a 300 mm fab in Dresden and is building a second here in Villach, Austria.