US chipmaker Wolfspeed plans to spend €3B to build a factory in west Germany on the site of a decommissioned coal plant, producing chips for EVs and industry
Laura Pitel / Financial Times :
Context & Ripple Effects
In early 2023, at the peak of the EV-chip capacity race, Wolfspeed picked a decommissioned coal plant site in west Germany for a €3B silicon carbide fab — a European counterpart to the $1.25B Apollo-led debt package backing its simultaneous US expansion in North Carolina and New York. The move fit a broader German push to localize power-chip supply, following Bosch's €1B automotive chip plant there.
The arc since has been brutal: after the US added a $750M award plus another $750M Apollo-led financing for the $6B+ American fabs, struggles at the New York plant and a heavy capital stack forced a Chapter 11 filing that cut roughly $4.6B of debt and nearly wiped out existing shareholders before an expected Q3 emergence.
First-order effects
- Wolfspeed's German commitment sat atop a balance sheet already stretched between two $6B-class US fabs, making the €3B European build dependent on continued cheap credit that the Apollo-led deals only partially provided.
Second-order effects
- Rival Infineon answered the same EV demand signal differently — a further €5B toward €7B total capacity in Malaysia — leaving lower-cost Asian capacity gaining share while Wolfspeed carried Western construction costs.
- Creditors led by Apollo ended up holding the company through restructuring, converting a growth-equity story into a debt-control story.
Third-order effects
- If the pattern holds, subsidized fab announcements prove insufficient to protect shareholders when the cycle turns: government awards like the $750M package de-risk projects, not equity holders, and distressed chipmakers now emerge creditor-owned rather than independent.
- The episode also strengthens the case that brownfield industrial sites — a coal plant reborn as a chip fab — will keep attracting semiconductor siting as Europe localizes power-electronics supply.
The trend: The EV-chip buildout is colliding with the semiconductor downcycle, turning debt-financed Western fab plans into creditor-controlled restructurings while rivals shift capacity to cheaper geographies.