European Union lawmakers have drawn up ambitious plans to dramatically increase semiconductor production in the bloc to become a leader in the field of chips.
To do so, it needs some major players from Asia and the United States to invest heavily in the continent, given the European Union’s lack of technology in critical areas such as manufacturing.
The European Commission launched the European Chips Act , a multi-billion-euro effort to secure supply chains, avoid future semiconductor shortages and boost investment in the industry. The law still requires the approval of EU lawmakers to pass.
Chips are essential for products from refrigerators to cars and smartphones. But the global crisis affected industries in all fields causing production stoppages and shortages of products.
Semiconductors have become a national security issue for the United States, and even a point of geopolitical tension between the United States and China.
This clash over semiconductors led to doubling of sanctions against SMIC, China’s largest chip maker.
The European Union is now trying to mitigate some of these risks with its latest proposal. The European Commission said: Europe must use its strengths and put in place mechanisms to create greater leadership positions and ensure the security of supply within the global industrial chain.
The EU Chip Act looks to inject 43 billion euros ($49 billion) of investment into the semiconductor industry and help the bloc become an industrial leader of the future.
The European Union wants to increase its market share in wafer production to 20 percent by 2030, from 9 percent currently. He also wants to produce more advanced and energy-efficient semiconductors in Europe.
Part of his plan includes reducing dependencies, although the European Union points to the need for partnerships with partners.
As the European Union looks to become more self-sufficient, it remains highly dependent on the United States and Asia.
The European Union needs help
Over the past 15 years or so companies have started to switch to the fables model. Under this model, companies design the chips but outsource manufacturing.
The actual chip manufacturing is now dominated by Asian companies, led by Taiwan’s TSMC. South Korea’s Samsung came next, followed by Taiwan’s UMC.
The US company, Intel, has fallen behind in recent years. However, it is now focusing on the manufacturing business and plans to make chips for other players.
But its technology is still behind the likes of TSMC and Samsung that can make the latest chipsets that go into the latest smartphones, for example.
Intel said last year that it plans to spend $20 billion on two new chip factories in Arizona, in an effort to catch up.
However, the European bloc does not have companies that can manufacture the latest chips. European bloc firms may also rely on semiconductor design tools from the United States.
Increasing wafer production to 20 percent of market share is extremely difficult for the European bloc. The focus on manufacturing is the biggest challenge.
As countries and regions around the world look to secure their supplies of semiconductors, there is increasing competition to secure talent and persuade companies to invest.
As part of a $2 trillion economic stimulus package, the US president has allocated $50 billion to semiconductor manufacturing and research. Countries such as Japan, South Korea and China are also boosting investment in semiconductors.
The main challenge for the European bloc is to attract new players. And the European Union must become a more attractive location than other geographies.
The European Union is trying to woo the leading chip manufacturers. Intel plans to build a new plant in Europe, although a specific location has not yet been chosen. TSMC is also in the early stages of evaluating its production facility in Europe.
Despite the delays European companies in the latest manufacturing technologies. But the European Union owns several major assets in the industry, the most important of which are Dutch company ASML, STMicro and NXP.
The focus of the bloc could be on securing the supply of chips for sectors in which its companies have a significant presence, such as the automobile industry. The semiconductors in the automobile industry are often less advanced and do not require the latest manufacturing technology.
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