According to Automotive News Europe, Bosch has initiated a critical testing phase at its new semiconductor plant in Dresden, Germany. The automotive industry is currently struggling to deal with the problem of chip shortages.

This 1 billion euro factory is expected to be put into production by the end of this year, mainly producing automotive chips. Bosch's existing semiconductor factory in Reutlingen, Germany, is located near the supplier's headquarters in Stuttgart.

Bosch said at a press conference on the 8th local time that the silicon wafer prototype at the Dresden plant has passed a fully automated production process for the first time. The wafer takes about six weeks to process, and about 700 processing steps are required.

The Dresden plant focuses on the manufacture of 300mm wafers, one of which can hold 31,000 individual chips. Bosch said that this larger size provides greater economies of scale than traditional 150mm-200mm wafers.

The Dresden plant broke ground in June 2018, and the plant will employ approximately 700 people.

The European Union has made European semiconductor production an important project of European common interest, namely IPCEI. This designation opens the door for financing public and private projects, and at the same time relaxes some competition rules in order to develop the industry more quickly.

Bosch is listed as a partner of semiconductor IPCEI.

Analysts and auto industry executives said that they expect the core shortage problem will continue into the first half of this year, and more than 1 million cars are expected to be discontinued.