The EU is investing € 42 billion in semiconductors

Photo source: Intermodal & Logistics Magazine

Reading time: 3 minutes

The European Union intends to invest almost € 42 billion in the semiconductor industry, in an attempt to reduce its dependence on Asia in this strategic sector where there is still a supply crisis.

“This is a major investment,” said Thierry Breton, European Commissioner for the Internal Market, during a visit to the Imec research center in Leuven, near Brussels. This plan “will guarantee the security of supply of European plants, increasing four times the production of semiconductors in Europe by 2030”, Thierry Breton specified, according to AFP, quoted by AGERPRES.

Although it ranks first in the world when it comes to chip research, the European Union has seen its share of world chip production fall to 10% in recent decades.

But the lack of semiconductors, which has been holding back the car industry for three years by forcibly shutting down many plants, has caused a real shock. Geopolitical tensions around China, as well as the pandemic, have highlighted the need to produce in Europe these indispensable components, most of which are currently imported from Taiwan and South Korea.

This crisis has persuaded the European Commission to relax its strict state aid rules and to launch an interventionist industrial policy on the European continent, which is traditionally very open to global competition.

“For the first time, Europe is modernizing its competition rules, especially those relating to state aid,” said Thierry Breton, who is responsible for the EU’s semiconductor initiative.

These components are inevitable in many objects used in everyday life, such as mobile phones, but also in data storage facilities, which have become the central element of a booming digital economy. Last year, semiconductors accounted for a global market of nearly 600 billion euros, according to consulting firm Yole Développement. According to Brussels officials, the market could reach 1 trillion euros by 2030.

The draft Commission regulation, which will have to be adopted by the Member States as well as the European Parliament, provides for grants of € 12 billion (six from the EU and six from the Member States) to fund research into the most advanced technologies. innovative and pilot lines to prepare for their industrialization.

In addition, to enable the establishment of large plants, but also to foster innovation among SMEs, Brussels will authorize another € 30 billion in public aid from Member States for companies in the sector, including foreign companies, such as the American giant Intel, which intends to build new plants in Europe.

The European executive hopes that these public funds will generate a much larger amount of private investment.

Brussels’ plan rivals that of the United States, which also intends to repatriate chip production to the United States. On Friday, the House of Representatives passed a bill that provides $ 52 billion in aid to relocate electronic chip production.

Analysts point out that Europe is currently suffering from a double dependence on semiconductors. On the one hand, the US reliance on chip design, as in the case of companies such as Intel, Micron, Nvidia and AMD. And on the other hand, a dependency on Asia, where most of the chip production operations are located, especially in Taiwan, where the giant TSMC operates, but also in South Korea, thanks to companies such as Samsung and SK Hynix, and more and more in China.

The European Union depends on Taiwan for more than half of its needs, Commissioner Thierry Breton said. This results in a major economic risk if a military conflict with China breaks out. “If Taiwan were no longer able to export, almost all factories in the world would shut down in three weeks,” Breton warned.