Robert Bosch opened a $1.2 billion chip plant in Germany on Monday, a record investment by the leading automotive supplier.
The Bosch plant received $243 million in state aid under a European Union investment scheme.
The plant is located in a semiconductor hub near Dresden and arrives as global chip shortages affect Germany’s economic recovery.
It will make specialist power-management chips and Application Specific Integrated Circuits (ASICs) that are designed to carry out a single task.
The plant will start making chips for power tools in July, with output of automotive chips to follow from September.
It will not address shortages of products like microcontrollers.
A recently unveiled plan targets doubling the region's share of global chip production to 20% by 2030.
Chancellor of Germany Angela Merkel said, "We aren't in pole position -- we have to catch up. We must be ambitious. Our competitors around the world aren't sleeping."