Central Europe's new Silicon Valley? US giant announces major investment in Czech town

The highest investment by any company made into Czechia ever, the CZK 46 billion from the US manufacturer will go towards a semiconductor power plant.

Expats.cz Staff ČTK

Written by Expats.cz StaffČTK Published on 21.06.2024 11:16:00 (updated on 21.06.2024) Reading time: 3 minutes

U.S. manufacturing company onsemi has announced it will invest USD 2 billion (CZK 46.3 billion) in expanding production at its plant in Rožnov pod Radhoštěm, Zlín. This marks the highest company-related investment in the modern history of the Czech Republic, according to Prime Minister Petr Fiala.

The new plant will focus on producing intelligent power semiconductors, which are used in electric cars, renewable energy sources, and data centers with artificial intelligence. Škoda Auto, a major car manufacturer, has welcomed the expansion, as it works with onsemi in providing car parts.

Transformative for the area

UniCredit Bank analyst Pavel Sobíšek believes that Rožnov and its surroundings have the potential to become the "Silicon Valley of Central Europe," with the onsemi investment potentially attracting more high-tech fields to the Czech Republic. 

Deloitte analyst David Marek also sees the investment as a potential inspiration for other technology companies from abroad. "The benefit of this investment is not only the extraordinary amount, but also the production with high added value, which is exactly what the Czech Republic has needed for a long time," said Marek.

Town mayor Jan Kučera stated: "We are very happy because it is a type of production that has a high added value, does not have a large burden, and is built by a partner who has been active here for a long time and is one of the best."

Creating jobs and adding to economy

According to Fiala, onsemi's current production in Rožnov is at 10 million chips per day, but with the expansion, it is expected to increase by hundreds of percent. This will also have a positive impact on the labor market, with the company planning to increase the number of jobs at the plant from 1,700 to roughly 3,000. 

With the expected influx of new workers and residents, the city of Rožnov has prepared a plan for roughly CZK 2 billion and 42 projects. These projects will focus on improving transportation, housing, school capacity, public services, and living space. "This is an extraordinary opportunity for the city," said Kučera.

The new plant is expected to contribute more than CZK 6 billion per year to the Czech Republic's GDP.

Minister of Industry and Trade Jozef Síkela views the expansion of the plant as a strategic investment for the future of Czech industry, as it will also help with European self-sufficiency in chip production. It could also serve as a catalyst for other companies considering investing in the country.

Would Trump or Biden continue such links?

The U.S. company’s expansion into Czechia is good news for the Czech economy and industry, although analysts are keeping a watchful eye on the outcome of the U.S. 2024 presidential election. 

Talking to Czech media outlet Deník N, Česká spořitelna economist Michal Skořepa says that a victory for Donald Trump would reduce the likelihood of more U.S. companies moving branches to Europe due to his isolationism and “America-first” approach. President Joe Biden, on the other hand, is less opposed to moving American business abroad.

AGENCY PROPERTIES

“Biden's policies encourage broader international cooperation and investment in technology,” agrees Helena Horská, a member of the government's National Economic Council.

Conversley, Horská affirms that “pragmatism always wins in business,” and a business relationship that would benefit both Czechia and the U.S. – especially against foreign powers such as China – would be something that Trump utilizes. 

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