U.S. investment would be the largest in the country’s history and another sign of plans to avoid dependence on East Asia.
Pending approval of state aid, Onsemi, a U.S. semiconductor manufacturer, announced last month a $2 billion plan to expand its semiconductor production in the Czech Republic, the largest foreign investment in the country’s history according to the Czech Ministry of Industry and Trade.
The $2 billion is targeted at the eastern Moravian town of Roznov pod Radhostem and will expand the production of semiconductors, used in the automotive and renewables sectors.
Onsemi’s Roznov investment addresses supply chain delays in the EU’s vehicle manufacturing sector and bolsters European self-reliance. Obtaining semiconductors has been challenging and since COVID-19, logistics companies have struggled to provide original equipment manufacturers with sufficient semiconductor supplies. Czech Prime Minister Petr Fiala said the investment would be a significant boost for Czech industry, while the government said the plant’s current output of 10 million chips per day would rise by hundreds of percent, Radio Prague International reported. By expanding production at the Roznov plant, car manufacturers in Germany and the Czech Republic will have far greater access to semiconductors needed to make their products.
Simon Keeton, head of Onsemi’s power solutions division, told Reuters that production from the new investment could start in 2027. However, Onsemi did not disclose further details on production volumes or expected revenue.
The Czech Industry Ministry announced that Onsemi plans to increase employment in Roznov from 1,700 to 3,000 workers and estimates a contribution of more than 6 billion crowns ($257 million) annually to the country’s GDP. Onsemi also employs 200 people in a development center in Brno, according to Seznam Zpravy.
This large new investment is part of a noticeable shift from the semiconductor industry trend of investing in East Asia. Current fears over Chinese aggression and supply chain disruption have forced companies to look elsewhere to expand production.
“Onsemi’s decision to expand in Czechia is a clear confirmation of our country’s attractiveness for foreign investment,” said Jozef Sikela, the Czech minister of industry. Onsemi’s investment follows previous moves from industry competitors to build in the EU (STMicroelectronics in Italy, TSMC and Intel in Germany).
Investment Incentives
Onsemi did not comment on potential incentives under negotiation with the Czech government, although the Industry Ministry said an incentive package could reach 27.5 percent of the total investment, Reuters reports. In comparison, Germany will contribute up to $5.4 billion to TMSC’s $11 billion semiconductor factory in Dresden, and Italy $2.1 billion to STMicroelectronics’s $5.4 billion plant in Catania.
The Czech government’s incentive package should be approved and announced during the first quarter of 2025.
Community Impact
The investment is already making itself felt in higher education. Two Czech technical universities are planning to expand their teaching of subjects allied to chip making in a direct response to Onsemi’s expansion plans, iDnes reports, citing Education Minister Mikulas Bek.
And the town of Roznov is sure to benefit extensively from Onsemi’s expansion. Its industrial history goes back to the 1950s with electronics and TV manufacturing, and in the 1990s, semiconductor fabrication.
“This investment from Onsemi is a continuation of this tradition,” Mayor Jan Kucera told Transitions. “There is a level of trust [with Onsemi]. It is not a new company. We know they are responsible and pay their workers above average.”
Kucera acknowledged some challenges Roznov may face with the influx of so many new workers, among them housing, public transportation, and spaces in local schools for employees’ children. However, he is confident that the town is prepared for the new growth.
Since the initial conversation about Onsemi’s investment, Roznov has conducted studies identifying risk areas and is working on a number of steps to expand the capacity of public services, the mayor said.
“Open conversation with Onsemi started last year about the investment. This helped because, as a municipality, we could prepare,” Kucera said.
…
Donivan Bullins is an editorial assistant intern at Transitions. He studies journalism and political science at the University of Kansas.
