“The goal must be to produce chips for the specific needs of European industry,” Bosch CEO Stefan Hartung said in a statement.

The Bosch project would come as part of the cross-EU project to boost production on the continent of the component, also known as chips, which are used in everything from electric vehicles to wind turbines.

Semiconductor production has become a strategic priority in Europe as well as the US, after the shock of the pandemic choked off supply, bringing factories to a standstill and emptying stores of products.

Earlier this year the EU put forward the “Chips Act”, a €43 billion plan with the aim of doubling Europe’s market share to 20% before 2030 and reducing reliance on Asian imports.

Bosch expected “continued growth in demand for semiconductors” in coming years, Hartung said.

Developing the microelectronics business was “vital to the success of all areas of Bosch”, since the chips were a “master key” used in a huge variety of products, he said.

The investment plan, set to run through 2026, would include new “development centres” at the group’s sites in Reutlingen, near Stuttgart in southwest Germany, and the eastern city of Dresden, at a cost of €170 million.

Bosch will also spend €250 million to expand the production space in Dresden by 3,000sq m over the course of next year.

It will also invest another €400 million to enlarge the Reutlingen plant to 44,000sq m by 2025 from 35,000sq m currently.

Germany is already home to Europe’s densest network of semiconductor production, with the region around Dresden sometimes dubbed “Silicon Saxony” for its concentration of chipmakers.

Earlier this year, US tech giant Intel said it would invest €17 billion in a new manufacturing site in Magdeburg, also in eastern Germany.