The Czech government said the project, built on post-industrial land, would be the biggest one-off foreign direct investment in the country, producing up to 10 million chips a day.

Onsemi said on its website that the new facility in the town of Rožnov pod Radhoštěm, in the eastern Zlin region, would produce chips “essential for improving the energy efficiency of applications in electric vehicles, renewable energy and AI data centers.”

The company added that its technology would help “reduce carbon emissions and environmental impact”.

The U.S. firm makes semiconductors from silicon carbide, a highly energy-efficient material, which experts say is hard to produce.

The head of Onsemi’s power solutions division, Simon Keeton, indicated that production at the new factory could start in 2027.

The Czech Republic’s trade minister, Jozef Síkela, said the facility would help adapt the country’s motor industry “to the rise of electromobility.”

Last year, the Czech motor industry saw production recover to pre-Covid levels of just under 1.4 million cars, one in seven of which were electric vehicles. In 2022, the Czech automotive industry was worth over $28 billion in total.

Attracting chip producers is the “Holy Grail” of development agencies in central Europe. A cloud of uncertainty over manufacturing in China and Taiwan due to geopolitical tensions and supply-chain problems has led many Western companies to look to this region as a possible alternative.

U.S. manufacturer Intel has committed to building a semiconductor research center near Wrocław, southwestern Poland, investing some $4.6bn.