October 24, 2024 /SemiMedia/ — German auto parts supplier ZF plans to withdraw from a $3 billion chip manufacturing project in Germany with U.S. chipmaker Wolfspeed, according to industry sources.

The sources said Wolfspeed decided to pause the project due to weaker-than-expected semiconductor demand and has raised doubts about the viability of entering the European market. ZF had initially planned to invest $185 million in the joint factory, which was set to produce chips for electric vehicles.

Wolfspeed announced plans in February 2023 to build the factory and a research center in Germany. If these plans are shelved, it would mark another setback for Germany's ambitions to revive its industrial sector.