American chip manufacturer ON Semiconductor (Onsemi) in June, it selected Roznov for a new $2 billion manufacturing center. This will be the largest investment by a foreign company in the Czech Republic in three decades, Bloomberg reported.
Onsemi to expand existing plant to produce integrated circuits for electric vehicles and the renewable energy industry. The contract with Volkswagen is already underway.
Success is important not only for the city and the stagnant Czech economy, but also for the ability European Union to secure supplies in the face of the global fight for key components.
Semiconductors are the backbone of the modern economy
Minister of Industry and Trade Jozef Sikela said that Semiconductors are becoming the backbone of the modern economy, adding that the more of these new technologies we produce domestically, the better for the economic security of the Czech Republic.
Onsemi’s investment in the Czech Republic is key to the Czech economy’s transition towards a more profitable, less labour-intensive industry than traditional car and car component manufacturing. At its existing plant, Onsemi’s 2,200 employees produce 10 million chips per day for automotive, industrial and telecommunications customers such as BMW, Mercedes-Benz, Siemens, Apple and Samsung Electronics.
Although the planned expansion investment will create only 800 new jobs over the next seven years, Onsemi expects thatRoznov’s annual revenues will gradually grow to at least $1.2 billionas expansion will focus on more profitable, higher-performance silicon carbide semiconductors.
The beginnings date back to the Cold War
Semiconductor production in Roznov dates back to the beginning of the Cold Warwhen communist Czechoslovakia moved part of its electronics industry there from a location near the German border. After the fall of the Berlin Wall, the conglomerate — then called Tesla Roznov — was broken up. Its chip-making unit was sold to mobile phone pioneer Motorola and later became part of its Arizona-based spin-off Onsemi.
The entire production process in one place
The new plant will handle the entire production processfrom silicon carbide crystal growth to the final product, and it will not be shared between Onsemi plants on three different continents.
This means that chips will be produced closer to automotive customersthe traditional engine of the Czech economy, which is currently struggling. The Czech automotive industry is being battered by rapidly rising wages, disruptions in the global supply chain and competition from Chinese electric vehicles.
An important step towards reducing the EU’s dependence on imports
A month after the announcement of the expansion of the plant in Roznov, Onsemi signs multi-year agreement to supply silicon carbide parts to Volkswagenthe owner of the dominant Czech manufacturer, Skoda Car. Both VW and Skoda have had to cut or suspend production multiple times over the past three years due to disruptions in the supply of chips produced mainly in Asia.
The expansion of the plant in Roznov is an “important step in efforts to reduce the EU’s dependence on imported strategic goods and components,” said Helena Horska, chief economist at Raiffeisen Bank International Czech Republic and an adviser to Prime Minister Petr Fiala. With Onsemi’s chips also used in solar panels, the investment could ultimately help reduce the country’s dependence on cars, she said.
Onsemi is still negotiating with the Czech government and the EU on financial supportwhich could cover about a quarter of the investment. If all goes well, the company plans to begin construction of a new production hall next year across the street from its current complex in Roznov.
