German engineering company Bosch has placed a big bet on the future value of the IoT, with a €1 billion investment to build a wafer fabrication centre in Dresden, Germany.

Wafers are used in the manufacturing of semiconductor chips, primarily for integrated circuits. The process of manufacturing semiconductors always starts with a silicon disc – the wafer. The bigger a wafer’s diameter, the more chips that can be made from it per manufacturing cycle.

Bosch says it is investing in the wafer ‘fab’ in order to manufacture chips based on 12-inch wafers, in response to growing demand for IoT and mobility applications. In fact, a study by PricewaterhouseCoopers estimates that the global semiconductor market is set to grow by more than 5 percent annually up to 2019, with the mobility and IoT market segments growing especially strongly.

Compared with conventional 6- and 8-inch wafer fabs, Bosch suggests that 12-inch wafer technology offers economies of scale. These wafers should therefore help Bosch to meet rising demand for semiconductors brought about by the growth of IoT applications such as those relating to smart homes and smart cities.

Dresden’s microelectronics cluster, known to some as ‘Silicon Saxony’, is well-known in Europe. It includes automotive suppliers and service providers, as well as universities offering technological expertise. Construction of Bosch’s high-tech plant is scheduled to be completed by the end of 2019, with manufacturing operations commencing at the end of 2021. Bosch intends to collaborate closely with local companies, to reinforce not only Germany’s, but also Europe’s, position as an industrial location. The company estimates that the fab will create as many as 700 new jobs in Dresden.

An ‘historic’ investment

“The new wafer fab is the biggest single investment in Bosch’s more than 130-year history,” said Dr. Volkmar Denner, chairman of the board of management of Robert Bosch GmbH.

“Semiconductors are the core components of all electronic systems. With connectivity and automation growing, they are being used in more and more areas of application. By extending our semiconductor manufacturing capacity, we are giving ourselves a sound basis for the future and strengthening our competitiveness,” Denner said.

Bosch has a strong pedigree in this space. For more than 45 years, the company has been making semiconductor chips in multiple variants, above all as application-specific integrated circuits (ASICs), power semiconductors, and micro-electro-mechanical systems (MEMS). Bosch ASICs have been used in vehicles since 1970 and the company claims that, during 2016, every car rolling off production lines worldwide had on average more than nine Bosch chips on board.

At its wafer fab in Reutlingen, Germany, Bosch currently manufactures roughly 1.5 million ASICs and 4 million MEMS sensors a day based on 6- and 8-inch technology. Overall, the company has made more than 8 billion MEMS sensors since 1995. It is therefore well placed to expand its operations with the 12-inch wafer to meet demand for IoT.

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Welcome investment

The investment has also been welcome by the German Federal Minister for Economic Affairs and Energy, Brigitte Zypries, who said: “We applaud Bosch’s decision to invest in Saxony. Strengthening semiconductor expertise in Germany, and thus in Europe as well, is an investment in a key technology of the future, and thus a very important step toward preserving and enhancing competitiveness, also of Germany as an industrial location.”

Subject to the approval of the European Commission, the Ministry for Economic Affairs and Energy (BMWi) plans to support the construction and commissioning of the new wafer fab in Dresden. In addition, the Digital Hub Initiative launched by the BMWi aims to make Dresden an IoT ecosystem.

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