Is the global semiconductor world reassessing their strategies? Delays in big-budget projects in Europe and the US say so. With China and Japan already retaining their positions, India and Southeast Asia are about to become new-age chip hubs.
Several major semiconductor projects worldwide have been delayed or halted in recent weeks, signalling growing challenges within the industry. Global chip giants such as Wolfspeed and Intel have reported suspensions at various fabs, and more recently, the GlobalFoundries-STMicroelectronics project in Crolles, France, was put on hold, with the cause still unclear.
In response to these disruptions, the companies involved are revising their investment strategies, optimising costs, and exploring financing options to stay on course. However, the underlying question remains: is this a sign of a deeper shift occurring within the global semiconductor industry?
The projects in limbo
At the beginning of this month, Bloomberg reported that the joint 58:42 fab venture between GlobalFoundries and STMicroelectronics in France had hit a roadblock. Construction has been paused after progress stalled over the past 18 months.
The project, announced in July 2022 and finalised in June 2023, was intended to build a new 12-inch semiconductor fab next to their existing facility in Crolles, France. With a total investment of €7.5 billion, supported by the ‘European Chips Act’ funding, the fab was expected to reach full production by 2026, producing 620,000 wafers annually.
Not far from France, Wolfspeed delayed its $3 billion semiconductor plant project in Saarland, Germany. In a June 2024 report, Reuters regarded this as a setback that underscores the European Union’s challenges in boosting local chip production and reducing reliance on Asian suppliers.
The plant, intended to produce chips for electric vehicles (EVs), is still in the works, with Wolfspeed seeking funding, though construction will not begin until at least mid-2025—two years later than planned. The report highlighted Wolfspeed’s internal investment pressures and European and US market challenges behind this decision.
Coming to US, about five months later, the company announced the closure of its 150mm Durham fab in North Carolina, another facility in Texas, along with a layoff of 20% workforce. The company again highlighted EV market obstacles, that directed their restructuring plans.
On the other hand, Intel’s grappling challenges have been on headlines since last year. The company has postponed the construction of its Fab 29.1 and Fab 29.2 facilities near Magdeburg, Germany, citing delays in EU subsidy approvals and the need to remove and reuse black soil. The project, originally scheduled to begin in summer 2024, will now start in May 2025.
The two fabs, which were set to adopt Intel’s advanced 14A (1.4nm) and 10A (1nm) manufacturing technologies, were expected to begin production by late 2027. But now, according to reports, Intel estimates that production will not start until between 2029 and 2030.
Intel is also facing delays with its Ohio-based chip projects. The $20 billion investment in two fabs in Licking County, Ohio, announced in January 2022, was initially expected to begin operations in 2025. However, due to weak market demand and delayed government subsidies, the construction of Fab 1 and Fab 2 has been pushed to 2026–2027, with production now expected to begin in 2027–2028.
Why Europe is at the heart of these delays
With Joe Biden’s departure on January 20, 2025, and uncertainty surrounding the US CHIPS Act of 2022 and Trump’s tariff plans, the Western world is bracing for a major shift in the global semiconductor landscape. Additionally, a DIGITIMES Asia report highlights political and economic challenges in Germany and France, the EU’s largest economies, jeopardising their semiconductor ambitions.
The ongoing Russia-Ukraine conflict has disrupted Europe’s energy supply, driving costs to unprecedented levels, and even if a ceasefire is reached under a potential Trump administration, the economic fallout from the war remains significant.
Germany’s reliance on Russian natural gas has slowed its economy, while France faces a fiscal crisis with rising deficits, tax hikes, and spending cuts. The rise of far-right conservatism in both countries complicates industrial projects, with Germany’s semiconductor ambitions faltering and France struggling with its chip plans.
A potential Trump presidency could further worsen these challenges, adding geopolitical and economic uncertainty and making it harder for Europe to regain its semiconductor competitiveness.
On the other side of the coin
In a separate development, three semiconductor projects made headlines recently. German-based Infineon has officially started constructing a new backend semiconductor factory in Thailand. Indian company Indichip, alongside Japan’s YMTL, has made a joint investment of $1.6 billion to establish India’s first silicon carbide (SiC) wafer manufacturing facility. Last but not least, Fuji Electric has begun mass production of 6-inch SiC power semiconductors at its facility in Japan.
On January 14, 2025, Infineon initiated construction on its new semiconductor backend production facility in Samut Prakan, south of Bangkok, Thailand. The first phase of the facility is expected to start operations by early next year, with plans for flexible capacity expansions based on market demand.
Indichip Semiconductors Ltd., an emerging power semiconductor startup in Amaravati, India, has partnered with Japan’s Yitoa Micro Technology (YMTL) to invest ₹140 billion (around $1.6 billion) in establishing a silicon carbide wafer manufacturing plant in Andhra Pradesh.
The initial production capacity is expected to reach 10,000 wafers per month, with plans to scale up to 50,000 wafers per month within two to three years. Initially focusing on 6-inch SiC wafers, the company plans to transition to 8-inch wafers.
Furthermore, Fuji Electric has started mass production at its facility in Aomori Prefecture, Japan, as of December 2024. The company had initially planned to begin production in the summer of 2024, but delays due to lower global demand for EVs pushed back the schedule.
Besides, China’s influence in the semiconductor industry is undeniable, with major players deepening their investments in the region. At GlobalFoundries’ 2024 summit in Shanghai, the company made it clear that its future strategy hinges on local partnerships rather than setting up its own facilities.
Likewise, STMicroelectronics has strengthened its presence through key collaborations with Sanan Optoelectronics and Hua Hong Semiconductor. European firms like Infineon and NXP are also ramping up their ‘Made in China’ efforts, recognising that despite geopolitical tensions, China’s demand remains crucial for growth.
India’s advent
These developments reflect a more stable influence of the South and Southeast Asian countries on the semiconductor world. And the shift? It is India, and its rapid emergence into the global chip scenario. According to Reuters, India’s semiconductor market is poised to reach $63 billion by 2026.
Fearing tariff hikes in US and other geopolitical tensions, many from the industry are seeing India as a better option for investments, with government initiatives like the India Semiconductor Mission (ISM) at place.
As India strives to make its place in the global semiconductor value chain, the Union Minister of Electronics and Information Technology, Ashwini Vaishnaw, announced that ‘Made-in-India’ chips will break ground by mid-2025.
“The nation establishes itself as a reliable alternative manufacturing hub,” the Times of India reported.
