Legacy auto supplier Bosch will build a $1.1 billion plant to build chips for self-driving cars, smart home devices, and smart city infrastructure — the company’s largest investment to date.
The company plans to finish building the plant by 2019, and start producing chips in 2021. It will be located in Dresden, Germany, and employ about 700 people.
While $1.1 billion might seem like a lot of cash for a plant, it’s not much in the context of the semiconductor business, which requires extremely complex and expensive facilities. For instance, in 2015 Samsung broke ground on a similar facility that cost the company $15 billion.
The facility could help Bosch follow through on existing plans and fend off its competition. For decades, Bosch has supplied automotive components to automakers, but many of its large clients are working on self-driving cars, prompting the company to pivot into systems for those vehicles specifically — in recent months, the company has agreed to supply self-driving systems to Baidu, Nvidia, and Daimler, for example. These companies could be demanding millions of chips a year for their cars — orders the new plant could help Bosch fulfill. And it could also help the manufacturer beat the competition — Intel and Qualcomm are looking to move into the car chip industry as well, but if Bosch’s plant is first-to-market and particularly efficient, it could beat those players out by making more chips faster, therefore making it a top partner for automakers eyeing self-driving partnerships.
And the timing of the announcement makes it a smart play. If the company is able to get the plant up and running on time, it’ll open at a time when the self-driving car market is expanding rapidly — BI Intelligence estimates that 213,000 self-driving cars will ship in 2021, and will jump to 320,000 in 2022. And there could be benefits in other rapidly growing markets, like the smart home, helping Bosch grow it’s broader digital business.
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