October 10, 2025 /SemiMedia/ — Germany plans to cut around 3 billion euros ($3.5 billion) from its semiconductor subsidy program over the next few years, redirecting part of the funds to repair domestic infrastructure such as roads and bridges.

The previous government had pledged 15 billion euros between 2025 and 2028 to strengthen the country’s chip manufacturing base. The latest decision, however, is seen as a setback to Germany’s ambition to reduce reliance on Asian suppliers and secure a stronger role in the global semiconductor supply chain.

The economy ministry said in a statement that microelectronics remains a “sovereign strategic technology” and that a long-term plan is being drafted to maintain Germany’s investment appeal. It added that several chip-related projects remain included in the 2026 draft budget currently under parliamentary review.

Earlier reports indicated that 2 billion euros in subsidies had already been approved, though no funds have yet been disbursed. Officials said the number of subsidy applications was more than ten times higher than expected, reflecting strong industry demand.

Infineon Technologies, one of Germany’s leading chipmakers, said the latest budget adjustments will not affect its projects that have already been approved or are under review.

Analysts warn that Germany’s funding cuts could make it more difficult for the European Union to meet its “Chips Act” target of raising the bloc’s global chip production share to 20% by 2030. A joint report by ZVEI and Strategy& estimated Europe’s current share at just 8.1%, with further declines expected without fresh investments.

By contrast, China and the United States have allocated far larger sums to strengthen their semiconductor industries — $142 billion and $52 billion respectively — intensifying competitive pressure on Europe’s chip ecosystem.