By Nora Eckert
DETROIT, July 13 (Reuters) - German auto component and chip maker Bosch is beginning sample production at its first U.S. semiconductor factory, the company said Monday, finalizing a $225 million agreement with the U.S. Commerce Department to strengthen domestic manufacturing of silicon carbide chips.
Some automakers and parts suppliers have expanded manufacturing in the United States under President Donald Trump, seeking to avoid costly tariffs and protect against geopolitical disruptions.
Chip shortages sparked industry-wide turmoil during COVID-19, exposing the sector's heavy dependence on a small group of suppliers in Europe and Asia.
Bosch bought the chip plant in Roseville, California in 2023 from TSI Semiconductors and reconfigured it, at a total cost of $2 billion including the Commerce Department funds, and will begin commercial production later this year.
Paul Thomas, president and CEO of Bosch in North America, told Reuters that the U.S.-Mexico-Canada Agreement on trade was part of the reason Bosch had increased its investment in the U.S. chip sector, as companies there seek more developed domestic supply chains.
"It was a really good location for us and we thought it was the right thing to do," Thomas said, citing the importance of semiconductors in the national security edict. Automakers want to work with companies "that can continue to supply from a robust nature near to them," he added.
The $225 million in funding comes from the Commerce Department's CHIPS Program Office, created under the 2022 CHIPS and Science Act to expand domestic semiconductor manufacturing and reduce reliance on overseas supply chains.
“The Trump Administration is committed to developing a secure supply chain here in the United States that will enable continued innovation and competitive leadership in industries of national and economic security importance,” said Secretary of Commerce Howard Lutnick in a statement.
Unlike the chips used for vehicle infotainment systems or advanced driver-assistance features, silicon carbide chips are mainly used to manage high-voltage electricity. In EVs, they help move power from the battery to the motor more efficiently, reducing heat and energy losses while improving driving range and charging performance.
Outside of the automotive industry, these chips can also be used to power data centers, Thomas said. Some automakers and suppliers are leaning more into this side of the business, producing energy storage system batteries to help support the AI boom.
While these chips are in higher demand for electric vehicles, sales of which have lagged, uses for hybrid vehicles and defense applications also make the investment timely, Thomas said.
Bosch plans to strengthen its U.S. operations through up to $7.5 billion in investments until 2031, it said on Monday.
(Reporting by Nora Eckert; Editing by Susan Fenton)
