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Gianfranco Gianangeli, who assumed the management helm of the Paris-based house in mid-2020, has resigned and will exit in the coming weeks, sources told WWD.

Gianfranco Gianangeli, chief executive officer of Maison Margiela since mid-2020, has resigned from the position and will leave in the coming weeks, market sources told WWD.

His next move could not immediately be learned. The same sources said Italy’s OTB, parent of the Paris-based fashion house, has already identified his successor and the person is expected to arrive in the coming months.

The identity of the new manager could not immediately be learned.

Contacted by WWD late on Thursday, OTB confirmed the end of its collaboration with Gianangeli by mutual agreement and added that “the company will announce its new leadership in the coming weeks.”

Gianangeli has kept a low-profile during his tenure — apt considering that the founding Belgian designer, Martin Margiela, was frequently referred to as fashion’s invisible man given his personal no-interviews, no-photo policy.

But the business has roared ahead in recent years, especially in China. Acclaimed British couturier John Galliano has been creative director since 2014, creating fashion fireworks galore and adding heat to the brand’s burgeoning accessories business and its retail expansion.

Gianangeli had joined Maison Margiela from his family-owned, namesake knitwear manufacturer in Perugia, Italy, which he had revitalized, securing production contracts for several marquee European luxury brands.

Before that, he was global retail director at Givenchy and associate international director at Prada. He also worked for several years at Bottega Veneta in various merchandising positions and as that brand’s regional vice president in Japan.

When he joined Margiela, sources had described Gianangeli as a well-rounded executive with an entrepreneurial streak, and strong merchandising flair. He came in to lead one of the key growth engines at OTB, alongside its core Diesel brand, and spearheaded several key retail openings and the fashion house’s move to swanky, expansive new headquarters on the Place des États-Unis in Paris.

Renzo Rosso’s OTB swept in and bought a majority stake in Margiela in 2002, one of a series of acquisitions aimed at building a multibrand Italian group.

Today OTB also comprises Jil Sander, Marni, Viktor & Rolf and a stake in Amiri, as well as production arms Staff International and Brave Kid.

The twin shocks of Covid and the war in Ukraine have taught us lessons about the value of economic sovereignty

In a few days, more than 200 international chief executives will arrive in Versailles to take part in an event entitled “Choose France”. Many of them will unveil investments in strategic areas. Since the first of these events in 2018, thousands of jobs and hundreds of factories have been set up, with more than 200 new plants established in France in the past two years alone.

We are committed to building back French industry and fostering our economic power. This will allow us to strengthen our public services and invest in our future. We are acting with unwavering determination at the national level, with the result that in 2022, according to a survey by EY, we were the most attractive country in Europe for foreign investment for a fourth year running.

However, this battle for re-industrialisation must obviously be fought on a European scale, as well.

Since becoming president of France in 2017, I have consistently argued for the idea of European sovereignty. At first this was seen as wishful thinking, and at times perceived as too French. However, during the past few years the EU has had to face two pivotal crises. And, because of the Covid-19 pandemic and the war Russia decided to inflict on Ukraine, we have acknowledged our strategic dependencies and decided to act to reduce them.

We Europeans reached this defining consensus at a summit in March 2022, also at Versailles. We agreed on the importance of remaining in control of our own destiny and we paved the way for a more sovereign Europe, with tangible decisions taken on defence, energy and economic security.

We are no longer naive. Without compromising our openness, we are acting to protect our interests, our independence and our values, and to assert our European economic and social model.

What we need now is a comprehensive framework to implement this European consensus on sovereignty. I propose a doctrine based on five pillars.

The first pillar is the most obvious: a commitment to competitiveness, greater integration and the deepening of the EU single market, which is the first condition for creating European champions in the areas of clean tech and artificial intelligence.

By contrast, industrial policy, the second pillar, has long been taboo. But in the past few months we have revamped this old concept and turned it into a powerful lever to meet the challenges of the ecological and digital transitions, as well as to match the ambition of our partners and rivals.

The European Chips Act will boost research and development and the production of European semiconductors. The Net Zero Industry Act will simplify existing rules and drive more investment and skills to green and clean technology.

In March, the European Commission announced amendments to state aid rules in order to better support Europe’s strategic industries. This has been accompanied by decisive progress on the reform of the electricity market.

The third pillar is the protection of vital European interests and strategic assets. The EU has, for the first time, created a tool to block foreign acquisitions of strategic European companies. And we have to be bold when it comes to the question of technological decoupling and the strengthening of export controls.

Next is reciprocity, the fourth pillar. It means that our trade agenda should be both ambitious and consistent with our broader political objectives. It must therefore be sustainable, fair and balanced, and pursue clear European strategic interests.

The final pillar in the framework is multilateral solidarity. Sovereignty does not mean self-reliance and the EU can thrive only in the context of global development. I have invited the countries of the global south to come to Paris in June to lay the groundwork for a new international financial framework.

We have to implement this doctrine without delay. We have to take back control of our supply chains, energy and innovation. We need more factories and fewer dependencies. “Made in Europe” should be our motto. We have no choice, as sovereignty is intertwined with the strength of our democracies.

For decades, the backbone of Europe’s economy was a middle class with well-paid industrial jobs confident that the next generation would be more prosperous than the last. In Versailles next week, and in the coming months, we Europeans can prove that our continent, the cradle of the Industrial Revolution, can once again be the home of flourishing industry and shared progress.

Pierre Salanitro: The gem-setter trusted by the big watch brands

The Genevan is expanding his creative reputation, built on supplying industry players, to launch his own luxury marque

A few days before the horological world descended on Geneva for the annual Watches and Wonders fair last March, the city’s Bailly Gallery was hosting an evening party. But this was no ordinary vernissage — it was a gathering of some of the most influential figures in the watch industry.

A relaxed-looking Thierry Stern, president of Patek Philippe, was accompanied by several of his top managers, including Laurent Bernasconi, Jérôme Pernici, and Patrick Cremers.

FP Journe founder François-Paul Journe and auction supremo Aurel Bacs were photographed with Tiffany & Co watch boss Nicolas Beau.

Then, there were guests from afar, such as retailers Michael Tay of The Hour Glass in Singapore and Ahmed Seddiqi of Dubai and Nasser Al Majed of Qatar, along with leading distributors and other retailers in some of the fastest-growing markets for watches.

They had gathered to celebrate the launch of a new luxury goods marque, S by Salanitro, which was presenting its first objets de luxe, alongside works by Pablo Picasso and Pierre Soulages. There was a sculpture in gold and precious stones inspired by a Mesoamerican mask from 1,500 years ago; a “vanitas” mirror decorated with a huge skull made from 1,277 precious and semi-precious stones; and a backgammon board set with black diamonds and blue sapphires. Their creator, Pierre Salanitro, an engaging 57-year-old Genevan of Italian descent, describes them as “objects to make you dream”.

Salanitro, owner of the brand, was the reason for the high-level horological executives in attendance. His name had meant little outside the world of watch industry suppliers until last September, when Patek Philippe announced that it was investing in the business.

But, within the industry, Salanitro is recognised as one of the leading gem-setters there is. He employs 230 people, has invested SFr50mn-SFr60mn ($56mn-$67mn) over the past 30 years, and puts the value of his company at between SFr70mn and SFr100mn.

Stern is full of praise for Salanitro’s creativity. “When we talk together, we talk about creation. For example, he said we should do diamonds on dome clocks. And he’s right — it’s beautiful,” Stern says. “He also has great ideas for designing watches and has the same aesthetic as I have in terms of watches. That means that, when he creates a diamond watch, it has to be ‘aggressive’ for men and not just bling bling.”

He adds with a chuckle: “The only thing with him is that he can go off like a firework. He is a very creative guy and sometimes you have to bring him down to earth.”

It is to harness that excess creativity that S by Salanitro was launched. “I have so many ideas in my head, and I have wanted to do this for many years,” Salanitro says. He insists that this new venture is neither a hobby nor an indulgence, but a business fulfilling a need, albeit a rarefied one at the top of the market: the backgammon set, for example, starts at SFr70,000-SFr80,000 ($78,000-$89,000.)

“I was convinced that there was demand when I went to Bangkok to have a meeting with a client,” Salanitro says. “They wanted unique things and were prepared to pay anything to have something different.” Commissions that have come in following the launch appear to have added further validation.

Salanitro began his working life at Swiss Bank Corporation, which became part of UBS, but it was only when he visited the gem-setting atelier belonging to the father of a friend that the former investment banker experienced a coup de foudre.

“I like making things with my hands and seeing the results, especially when you are working with noble materials,” he says. He asked for a job and, for a few punishing months, worked at the jeweller’s bench for three hours in the morning before going into the bank — then returning for a further three hours of stone-setting at the end of the day.

His friend’s father took him on in 1987 when demand for gem-set pieces fell, but Salanitro found himself out of work. Undaunted, he set up a workshop at home and carried out repairs for local jewellers. His break into the watch industry came, when he did some work for Piaget.

“When I started working for Rolex and Patek Philippe, doors opened to me,” says Salanitro. “Because their quality standards are so high, everyone trusts you.”

He opened his first workshops, taking on 12 employees, in the Acacias district of Geneva, near Rolex’s headquarters. “The big brands wanted to deal with one partner and not with many different suppliers. As a result, some of the smaller businesses were using subcontractors,” he explains.

Salanitro saw an opportunity to establish a one-stop-shop, offering prototyping, case fabrication, bracelet-making and polishing services with a single standard of quality, under one roof. He began acquiring smaller workshops.

“I first purchased Serti Concept, because the proprietor wanted to retire — that cost about SFr900,000 ($1mn) — then a small polishing business called Polifer, which had seven people, for about SFr300,000 ($334,000),” he recalls.

Salanitro’s biggest investment was in Sertis Créations, which employed 50 staff. “They were my main competition, but they got into trouble,” he says. “It was an investment of SFr6mn ($6.7mn), but it also brought me two clients with whom I was not yet working.”

In addition to Richemont, Rolex, Patek Philippe and Audemars Piguet, Salanitro also works for LVMH. “I have a great working relationship with Alexandre, Frédéric and Jean Arnault,” he says, referring to the sons of LVMH chief executive Bernard Arnault who are, respectively, executive vice-president at Tiffany & Co, Tag Heuer chief executive, and head of Louis Vuitton’s watch marketing and product development.

“And I have the highest respect for Stéphane Bianchi [head of LVMH’s watch and jewellery division], who is a true gentleman,” Salanitro continues.

As for Patek’s investment in the Salanitro brand, “Pierre is still in charge”, says Stern. “I didn’t buy the whole company; I just bought a certain percentage. We don’t say how much and it’s not really that huge, but it’s enough to guarantee me the capacity. The jewellery side of Patek Philippe is increasing, not only for ladies but also for men.”

But, for Stern, the deal was about more than securing capacity for gem-setting. “It was a little bit like my grandfather in the old days: we just shook hands, and we knew it was done,” he says. “But it’s not only about business, it was also about friendship. We met just after we had left school.”

Stern, who is four years younger than Salanitro, adds: “He grew up in his business. I grew up with Patek. We trust each other. I would say we have the same philosophy, and the same friends.”

Founded just 24 years ago, the watchmaker is attracting a loyal young following with its takes on antiquarian-inspired horology

Step into the salon and manufacture of FP Journe, in a 19th-century building where Geneva’s old town meets the modern city, and it is immediately clear how far the watchmaker stands apart from its independent peers.

Founded in 1999, the brand hails from the same era-defining decade as today’s other indie watchmaking stars, such as Richard Mille, Urwerk, De Bethune and MB&F — brands that are synonymous with disruptive horological concepts and futuristic, avant-garde design.

But, rather than propel you into the future, FP Journe is more likely to thrust you centuries into the past. Visitors to the three-storey manufacture are met by a 168-year-old astronomical clock by the French maker CL Detouche and the complete library of the distinguished horological expert and historian Jean-Claude Sabrier, all overlooked by elaborate ceiling frescoes that reproduce the first sky charts of 16th-century astronomer Petrus Apianus, who mapped time via the stars.

FP Journe watches do the same: its award-winning complications notably revolutionise antiquarian watchmaking concepts, with most set in signature, classic round cases with traditional styling — think blue steel hands and guilloche accents. Dials come etched with FP Journe’s Latin tagline, “Invenit et Fecit” (Invented and Made).

“I don’t do this on purpose,” says founder François-Paul Journe, 66, who first cut his teeth in 1977 at his uncle’s antique watch restoration workshop in Paris. By age 21, the Marseille-born Journe had started his first tourbillon pocket watch. “I was born in a museum, immersed in the history of watchmaking. I’m just presenting my vision without being conscious about it. It’s not a strategy,” he says.

Journe rarely gives interviews and has a reputation for being elusive and intimidating. Celebrated as an inventor, he once said that “watchmaking, even the one I make, is a fossil science, because we no longer need it”. In his salon, he sits beside a 1.7m-tall resonance regulator from the 1780s by Antide Janvier.

Journe is the only person in the manufacture allowed to handle the piece, which partly inspired his popular Chronomètre à Résonance watch — the name taken from a natural physical phenomenon, first discovered in 1665, where two pendulums placed together will naturally synchronise. Journe recreated the concept in a wristwatch — the first to do so.

“We’re playing with completely useless concepts from the 18th and 19th centuries, but which make people dream,” he says. Journe admits that art will always trump the commercial. “If we are talking about watchmaking art, we are the first; but if we talk about turnover, we are the last,” he says, with a smile.

However, while rooted in antiquarian horology, FP Journe is increasingly catching the eye of young collectors, aged 25 to 30.

Its first London boutique opens next month, in Mayfair, hot on the heels of a new flagship that opened in New York last month, in SoHo.

And, today, Christie’s Geneva is hosting a FP Journe live sale — the first ever dedicated to a single independent watchmaker. With just 39 lots, the auction is expected to achieve SFr7.8mn-SFr13.9mn ($8.8mn-$15.6mn) — a conservative estimate if past auction results are any indication.

In November 2021, Phillips auctioned several ultra-rare FP Journe watches, including a 1999 Tourbillon Souverain and 2000 Chronomètre à Résonance, both which were among Journe’s first-ever models, limited to just 20 pieces each and sold under a subscription model when the brand was first starting out. They fetched SFr3.5mn and SFr3.9mn, respectively. An original Tourbillon retailed in 1999 for SFr27,500.

Limited series are part of FP Journe’s offering, and there are long waiting lists for all models. The brand only makes around 1,000 mechanical watches a year. Other independent watchmakers, such as Patek Philippe and Richard Mille, produce 70,000 and 5,300, respectively. All the watches are assembled by 25 watchmakers and seven artisans who finish every component — one part can take between five and 45 minutes to mirror-polish, depending on the model.

Remi Guillemin, head of watches for Christie’s Europe, says FP Journe “redefines what rarity is”, noting that, where big brands will make 100 limited pieces of a model, FP Journe may make only 10. “It’s very different from watch manufacturers where the same watch comes out for 10 years, with four different dial colours,” he notes.

In an age of slick marketing campaigns and commercial agendas, Journe’s genuine and singular commitment to his craft resonates with collectors, especially the watch purists who have been crucial to the brand’s continued independence.

“Journe was fortunate to have had this extremely loyal, diehard base of watch nerds,” says Michael Tay, group managing director of Asia-Pacific-based retailer The Hour Glass. “The nerds were the ones that had believed in him from the beginning and understood what he was trying to accomplish.”

And the brand loyalty runs deep. The Journe Society is a members-only group of FP Journe enthusiasts that grew from an informal band of passionate collectors in New York in 2016. Today, there are about 100 members worldwide and it is a close-knit community that enjoys travelling and socialising together, bonding over their love of FP Journe watches.

“Most of our members joined before the recent luxury watch craze, attracted to the brand’s traditions, design and technology, rather than flashy marketing or celebrity endorsements,” says Journe Society president Brad Schwartz.

Although the society is independent of the brand, Journe is appreciative of its support. Several years ago, he created a special edition watch for the society, with each piece engraved with a member’s name on the case back.

Being close to his clients, Journe is aware of how limited production is driving not only speculation for his watches, but also frustration. For the sake of quality, production will not be increased, he insists, though he hopes to streamline distribution by reducing independent retailers and focusing on boutiques, such as New York and London.

The latter venue will echo the identity of the New York flagship, which notably features a library, bar, kitchen, wine cellar and lounges — with all furniture chosen by Journe — and is designed as a space where collectors can convene. “The main idea is to propose entertainment, since we’re not able to provide clients with enough watches for the demand,” he says.

“His watches have an incredible aesthetic sensibility that allows you to fall madly in love with their aesthetics and conception,” says Tay.

“It’s going to take a couple of generations more before we see somebody quite like Journe.”

Germany’s new chip factories: a bet on the future or waste of money?

The Scholz government is spending billions subsidising the country’s semiconductor industry. Some believe it does not make economic sense

It was a moment of triumph for Jochen Hanebeck, boss of German chipmaker Infineon, as he broke ground on the company’s new €5bn semiconductor plant in the east German city of Dresden earlier this month. And there was one man, he said, who had made it all happen.

Addressing his guest of honour, chancellor Olaf Scholz, he thanked him for providing “substantial budgetary resources” to support the German chip industry. “At a time when our country is facing so many great challenges, that’s quite a feat,” he added.

Over the past couple of years, Germany has attracted massive investments in its chip sector. Intel, Wolfspeed and Infineon are all building big new factories. The largest chipmaker of all, TSMC of Taiwan, reportedly might follow suit.

But the new fabrication plants, or fabs, are coming at an eye-watering cost. Scholz’s government is throwing billions of euros in subsidies at the tech companies to lure them to Germany — €1bn in the case of Infineon’s new plant.

“That’s €1mn in state grants for every new job created, just to improve our security of supply by a little bit,” Clemens Fuest, head of the Ifo, a leading economic research institute, told ARD TV. “Even if it all works, we’ll still be importing 80 per cent [of our chips] by 2030.”

The sudden passion for subsidies comes at a time of growing alarm in Europe over the fragility of its supply chains and its huge dependence on Taiwan and South Korea for a resource that Scholz in Dresden described as the “oil of the 21st century”.

The end-of-days scenario stalking the corridors of government in Berlin and Brussels: China invades Taiwan, source of more than 90 per cent of the world’s most advanced chips, and the supply of semiconductors dries up, bringing factories the world over to a standstill.

“We saw last year what a mess we’d got into with our energy dependence on Russia, how fatal that was,” says Michael Kellner, state secretary at the German economy ministry. “The lesson from that is, in terms of our chip production, we in Europe have to have greater autonomy.” 

The EU’s response has been to loosen state-aid rules and mobilise billions of euros in grants for tech companies. Officials argue they have no choice: the US is enticing chip manufacturers and clean energy companies with a vast array of financial incentives, and if Europe fails to act it risks losing the race for the technology of the future.

“In the competitive situation we’re in globally with fabs, everybody dopes,” says chip industry expert Jan-Peter Kleinhans of Stiftung Neue Verantwortung, a think-tank. “And whether you like it or not, if you don’t dope, you cannot compete.”

But the level of state support is beginning to reach levels that even advocates of more chip investment find excessive. Intel, for example, was due to receive €6.8bn in government support for its new fab in the east German city of Magdeburg. Yet it is now demanding around €10bn. Critics are questioning why it should get so much state aid, especially when there’s so little domestic demand for the cutting-edge chips it plans to produce in Germany.

Intel’s fresh demands for cash have unleashed a heated debate among economists about whether it’s the best use of taxpayers’ money.

“This may lead to a significant misallocation of resources,” says Reint Gropp, head of the Leibniz Institute for Economic Research, Halle (IWH). “It would probably be more efficient to just buy cheap subsidised chips from the US.”

Where the US leads

The decision to open the subsidy floodgates in Europe was a direct response to the new, activist industrial policy being pursued by the US. At issue are the Biden administration’s Chips and Science Act, a $280bn package that includes $52bn in funding to boost US domestic semiconductor manufacturing, and the Inflation Reduction Act, which provides $369bn of subsidies and tax credits for clean energy technologies.

The legislation put the EU in a quandary: should it match it with financial support of its own, in the midst of a cost of living crisis that was putting huge strain on Europe’s citizens and member states’ public finances? Or should it ignore them and run the risk of its companies defecting to the US?

The EU chose the first route. It has enacted its own Chips Act, which aims to mobilise €43bn in public and private investments for the bloc’s chip industry, and in so doing double its share of the global semiconductor market from less than 10 per cent today to 20 per cent by 2030.

One of the EU’s main motivations was the traumatic memory of the havoc wreaked by the Covid-19 pandemic. Lockdowns and trade chaos disrupted global chip supply, causing production shutdowns across the auto industry.

“We lost 1-1.5 per cent of our GDP in 2021 because of a lack of semiconductors — or about €40bn,” says a senior German official.

But the spectre of conflict over Taiwan is much more alarming. Speaking at the Infineon groundbreaking ceremony, Ursula von der Leyen, European Commission president, noted that any disruption to trade caused by tensions over Taiwan “could do immediate and serious harm to Europe’s strong industrial base and our internal market”. The response, she said, must be to “put our chip production on a broader footing and expand our own capacities”.

If the only way to achieve that is to offer billions of euros in financial support to tech giants, then so be it, officials say. “I’m no great fan of subsidies,” says Kellner. “It would be great to be able to abolish them all. But that’s just impossible. And we have to live in the real world.” 

But the shift has proved painful for the academic economists still wedded to the principles of German “ordoliberalism”, with its abhorrence of state intervention in the economy and the idea of granting subsidies or tax privileges to certain industries.

Critics of the EU’s drive for greater self-sufficiency also claim it is misguided: it misses the point that materials for chip production are just as critical as the chips themselves — and the market for them is often just as concentrated.

Kleinhans says one reason — of several — for the semiconductor crisis during the pandemic was a shortage of ajinomoto-build-up-film substrate, an insulating material which is used in high performance processors and is made by just a handful of manufacturers.

Chip fabs also depend heavily on imported chemicals, he says: “To produce a modern semiconductor you need about 80 per cent of the periodic table in terms of elements.” So even if all the fabs that have been announced for Europe are actually built, “we will continue to depend on chemicals from foreign countries — there’s just no way around that”.

Some economists have, for that reason, argued that Germany should consider alternatives to showering money on tech companies — such as trying harder to improve the business environment and making it more conducive to innovation.

A lot needs to be done: companies routinely complain about Germany’s poor digital infrastructure, its shortage of IT workers, its burdensome regulation. “Believing that giving money to companies can fix all those problems is simply wrong,” says Marcel Fratzscher, head of the DIW think-tank.

It is also far from clear that Germany and the EU can win the subsidy race. Data compiled by Everstream, a supply chain data company, show there were investments totalling $122bn in new chipmaking capacity in the US between 2021-25, compared to just $31.5bn in the EU.

“Worldwide subsidies for chip production total more than $700bn,” says Gropp. “So with its €43bn the EU’s not really making much of a dent.”

Meanwhile, despite the EU’s move to open its purse-strings, it is still proving painfully slow to approve applications for financial support. US chipmaker Wolfspeed and ZF, a German automotive supplier, announced in February they were teaming up to build a chip plant in the west German state of Saarland. They are still waiting for a decision from Brussels to approve the subsidy they requested, as is Infineon.

Value for money?

However vehement the critics, business groups in Germany have generally given a warm welcome to the new state aid regime announced by the EU, and credit it with an upsurge in chip investment.

Indeed, Germany has over the past couple of years attracted some of the world’s largest semiconductor companies to its shores. Intel’s €17bn fab in the eastern city of Magdeburg will be its biggest in Europe. Wolfspeed and ZF’s planned €2.5bn plant will produce silicon carbide chips, used in electric vehicles, solar cells and industrial hydraulic systems. And then there’s Infineon’s “smart power fab” in Dresden which will make power semiconductors and analogue mixed signal components, used in power supply systems and data centres.

All of them will receive big subsidies, Intel the biggest. But, faced with higher costs, it now wants more. One driver is the company’s worsened financial outlook. Chief executive Pat Gelsinger slashed Intel’s dividend to shareholders by nearly two-thirds in February to conserve cash. Late last year it announced it would seek cost savings of $10bn by 2025.

Some German officials have expressed sympathy with the company’s demands, chief among them Sven Schulze, economy minister of the state of Saxony-Anhalt, of which Magdeburg is the capital.

“The world has changed — energy and construction costs have gone up and Germany’s competitive position globally has worsened,” he says. “It’s no use to anyone if manufacturing is so expensive here that [Intel’s] products are no longer competitive on international markets.”

But others are less amenable. “We will not let ourselves be blackmailed,” finance minister Christian Lindner told the German business daily Handelsblatt in February. “A US company that made $8bn net profit [last year] is not a natural recipient of taxpayers’ money.”

He also wondered aloud whether the chips that Intel will produce in Magdeburg “are really needed by German industry” or will simply be sold into the global market.

Lindner’s point has been taken up by others, too. Germany has strong demand for “power semiconductors”, tailor-made chips for industrial applications and the automotive sector, which will be the mainstay of Infineon’s new fab in Dresden. But Intel’s Magdeburg plant will make “leading edge” chips, which are needed for things like AI.

Similar arguments over where to focus the firehose of government investment in semiconductors are playing out in other parts of the world. Silicon Valley companies such as Apple and Nvidia are overwhelmingly reliant on TSMC’s unparalleled capabilities in producing the cutting-edge chips that power iPhones or OpenAI’s breakthrough ChatGPT chatbot. Any interruption to the Taiwanese manufacturer’s output would quickly throttle the availability of many of the world’s most popular tech products, used by millions of consumers every day.

But outside an elite handful of American Big Tech companies, a far larger number of businesses depend on older chips to produce cars and household appliances — at a time when Chinese semiconductor companies, under pressure from US sanctions, are ramping up their investment in these more “mature” chips.

Kleinhans, of the SNV think-tank, says demand for semiconductors in Germany is strongest in the automotive industry, industrial automation and in the manufacturing of medical devices.

“None of them need cutting-edge chips in large quantities,” he says. The car industry, for example, needs semiconductors made according to “older manufacturing technologies” that have long been in the market.

Others agree that Germany and the EU, with its Chips Act, are making a mistake by placing such a big bet on cutting-edge chips. The approach “threatens to ignore the actual needs of Europe’s key industries”, says ZVEI, a trade body which represents Germany’s electronic and digital sectors.

Officials dismiss that argument. “In terms of digitisation . . . Germany is really failing to keep up with other developed economies,” says Kellner from the economy ministry. “And if we just stick with the old technologies, we’ll fall even further behind. And that’s not the logical path.”

Intel has also dismissed the claim that there is no domestic market for the chips it will produce in Magdeburg. “There’s lots of applications for leading-edge technology in cars — autonomous driving, recognising obstacles, the entertainment system, for example,” says the company’s Europe spokesman Markus Weingartner.

Intel also plans “accelerator programmes” to help the car industry introduce leading-edge technologies into its systems, he adds.

That view is shared by experts. “Intel Magdeburg is a strategic investment and a bet on the future,” says Lukas Klingholz of the digital association Bitkom. “We don’t know exactly how demand for leading-edge chips will develop in Europe, but it’s definitely going to grow overall over the next few years. And so far, Europe has no capacity and knowhow to produce them.”

Indeed, according to Kearney, the management consultancy, European demand for leading-edge semiconductors will grow by 15 per cent every year, compared to just 3 per cent a year for more mature chip technologies. Making sure the EU has its own leading-edge chip factories is an “investment in Europe’s resilience and sovereignty”, says Klingholz.

Scholz’s government appears open to increasing the amount of state aid to Intel — but only if the company raises the volume of investment earmarked for Magdeburg. Officials say Intel is open to that; the company declined to comment.

“There are good reasons for Intel to increase the level of investment, and for that reason, there are also good reasons to look again at how much support Germany and the EU will provide,” says one official.

“The level of state aid depends on how much [the company] invests,” says Kellner. “It’s quite normal that additional state support depends on the total investment volume that is deployed.”

Meanwhile, the government has also sought to provide comfort to Intel on the question of energy costs, which have ballooned in Germany since Russia’s invasion of Ukraine. Earlier this month Kellner’s ministry put forward plans to subsidise the cost of electricity for energy-intensive industries, proposing that prices be capped until 2030 at €0.06 per kilowatt hour — about half their current level. The estimated cost to the public purse will be €25bn-€30bn.

“The point of this is to create an attractive business environment for energy-intensive companies — including those that produce semiconductors and batteries,” says Kellner. “Clearly this agenda is going to benefit the whole semiconductor industry — not just Intel but others, too, such as Infineon and Wolfspeed.”

The proposed reform shows how determined Scholz and his government are to make sure that Germany becomes a major player in the global chip industry.

At Infineon’s groundbreaking in Dresden, Scholz said chips were pivotal to Germany’s plans to derive 80 per cent of its electricity from renewable sources by 2030 and go carbon neutral by 2045.

All the things needed for that — wind turbines, solar panels, heat pumps and electric vehicles — had one thing in common: chips. “We need semiconductors,” he said. “Lots and lots of semiconductors . . . And that’s why we have to strategically expand our own capacities [to produce them] in Europe.”

Foreign policy chief Josep Borrell urges ‘coherent strategy’ towards Beijing’s ambitions

The EU’s chief diplomat has warned that China will “take geopolitical advantage” of a Russian defeat in Ukraine and that Brussels needs to respond to Beijing’s global ambitions.

Josep Borrell, the bloc’s high representative for foreign policy, has urged member states to find a “coherent strategy” to deal with China that responds to both Beijing’s rising nationalism and a “hardening of the US-China competition”.

“The China issue is much more complex than the Russia issue,” Borrell wrote in a private letter to EU foreign ministers seen by the Financial Times. “China’s ambition is clearly to build a new world order with China in its centre . . . A Russian defeat in Ukraine will not derail China’s trajectory. China will manage to take geopolitical advantage of it,” he added.

The letter was pitched as a starting point for two days of discussions between EU foreign ministers starting on Friday to draft a new policy towards Beijing which EU leaders are set to discuss next month.

The Stockholm discussions are expected to focus on adjusting the bloc’s current strategy on China with its three-pronged approach of “partner, competitor, rival” to give greater weight to the “rival” part, according to people familiar with the talks. This shift “follows from a careful analysis of what China is doing”, one EU diplomat said.

In his letter sent on Thursday, Borrell also emphasised the bloc’s willingness to “engage seriously” with Beijing over the war in Ukraine, despite its rhetorical support for Moscow. He said the EU “welcomes all genuinely positive moves coming from China aiming at finding a solution”.

The Chinese leadership has put forward peace proposals but has been criticised by the west for taking Moscow’s side and failing to engage with Kyiv. China president Xi Jinping eventually called his Ukrainian counterpart Volodymyr Zelenskyy 14 months after Russia’s full-scale invasion in February last year, but that gesture was largely seen as an attempt at repairing strained relations with European capitals.

Borrell wrote in the letter that the EU should not seek to “block the rising power of emerging countries”, in a nod to reluctance among member states to embrace the US’s more hardline approach to China.

He also made a pitch for the EU’s “de-risking” strategy, which he portrayed as less risky than America’s decoupling from China. The strategy was first laid out by European Commission president Ursula von der Leyen when she called for “new defensive tools” for sectors such as quantum computing and artificial intelligence.

Brussels should also factor in China’s influence when dealing with low-income countries, Borrell wrote, warning against expecting those nations “to take one side or the other”.

The majority of developing countries have been reluctant to endorse western sanctions against Russia and China has seized the opportunity to cast itself as a non-aggressive power that is neither starting wars nor pressing other countries to adopt economic restrictions on its rivals.

“The EU must be aware that many countries see the geopolitical influence of China as a counterweight to the west and therefore to Europe,” Borrell wrote. “They will seek to strengthen their own room for manoeuvre without picking sides.”