eu greenlights €2.27 billion for ams osram chip plant, challenging asian dominance

2025-02-26 general

Brussels, Wednesday, 26 February 2025.
the european commission approved a substantial €2.27 billion subsidy for ams osram. the investment will support the construction of a semiconductor backend manufacturing facility in austria. this move is a key part of the european chips act. it aims to bolster europe’s chip production capabilities. the goal is to reduce reliance on asian suppliers like tsmc. the new facility will employ advanced technologies. it will combine cmos devices with silicon through-holes for vertical connections and flip chips. planned to be fully operational by 2030, it marks europe’s first facility producing grade 0 automotive-qualified products.

investment strategy and market impact

From an investor’s perspective, this subsidy presents a mixed bag. The €2.27 billion investment aims to enhance ams Osram’s production capacity [1]. According to ams Osram CEO Aldo Kamper, a focus on the core semiconductor business is underway [2][3]. Kamper anticipates a turbulent 2025 [2]. Despite a 5% revenue decrease in 2024, the semiconductor core business saw approximately 7% year-over-year growth compared to 2023 [2]. This growth was fueled by strong rebounds in mobile device sensors and a resilient automotive business [2]. The ‘Re-establish the Base’ strategic efficiency program is reportedly yielding cost savings ahead of schedule [2].

long-term growth and competitive dynamics

The subsidy is part of a broader EU strategy. The strategy aims to establish europe as a leader in semiconductor manufacturing [1]. Commissioner Maria Garcia notes this investment supports the strategic goal [1]. The facility in Premstätten is intended to reduce reliance on non-european silicon manufacturing [2]. The EU commission states ams osram has committed to applying for recognition as an integrated production facility and open eu foundry under the european chips act [2]. They will adhere to all obligations associated with this status [2].

challenges and future outlook

While the subsidy offers potential upside, investors should note ams osram’s challenges. The company experienced a 5% revenue decline in 2024 and has been cutting €35 million in traditional CMOS products as part of a turnaround plan [2][5]. The new facility, costing €1.4 billion, is slated for full production by 2030 [2][5]. The EU commission has made seven subsidy decisions under the european chips act [2][5]. These include support for facilities by stmicroelectronics, european semiconductor manufacturing company, and infineon [2][5]. The long-term success hinges on ams osram’s ability to execute its strategic shift and capitalize on growing demand in automotive and mobile sensing [2].

Bronnen

European Chips Act Semiconductor Subsidy