 |
| The EU wants to be the chip leader |
European lawmakers have drawn up ambitious plans to significantly increase the group's production of semiconductors to become a global industry leader.
Given the European Union's lack of technology in key sectors such as manufacturing, this will require significant investments on the continent by some of the major players in Asia and the United States.
The European Commission launched the European Chips Act, a multi-billion-dollar initiative to secure supply chains, avert future semiconductor shortages, and boost investment in the industry. The law has yet to be passed by the European legislator.
Chips are essential to everything from refrigerators to cars to smartphones. But the global crisis spread to all sectors and led to production stoppages and product shortages.
Semiconductors have become a source of national security concern for the United States and even a geopolitical flashpoint between the United States and China.
The semiconductor dispute has led to doubling of sanctions against SMIC, China's largest chip maker.
With its latest proposal, the EU is now trying to mitigate some of these risks. The European Commission said: Europe must build on its strengths and establish mechanisms to achieve greater leadership in the global industrial chain and ensure security of supply.
The EU's chip law aims to inject 43 billion euros ($49 billion) of investment into the semiconductor industry and help the EU become an industry leader of the future.
The European Union wants to increase its market share in biscuit production from 9% currently to 20% by 2030. It also wants to produce more advanced and energy-efficient semiconductors in Europe.
Part of his plan includes reducing dependencies, although the European Union stresses the need for partnerships with partners.
As the European Union tries to become more independent, it is still highly dependent on the United States and Asia.
The European Union needs help
For fifteen years, companies began to switch to the metaphorical model. In this model, companies design the chips but outsource manufacturing.
Actual chip manufacturing is now dominated by Asian companies, led by Taiwan's TSMC. Taiwan's UMC has followed South Korea's Samsung closely.
The US company Intel has lagged behind in recent years. However, the company is now focusing on manufacturing operations and plans to make chips for other players.
But its technology still lags behind TSMC and Samsung, which make the latest chipsets for the latest smartphones.
Intel said last year that it plans to spend $20 billion on two new chip factories in Arizona to catch up.
However, no company in the European Union can produce the latest chips. European companies in the group can rely on American semiconductor design tools.
It is very difficult for the European group to increase the production of chips to a market share of 20%. Focusing on manufacturing is the biggest challenge.
As countries and regions around the world scramble to secure their supplies of semiconductors, competition is growing to attract talent and companies to invest.
As part of a $2 trillion stimulus package, the US president has allocated $50 billion to semiconductor manufacturing and research. Countries such as Japan, South Korea and China are also increasing their investments in semiconductors.
The biggest challenge facing the European bloc is to attract new players. The European Union should be more attractive than other regions.
The European Union is trying to attract major chip makers. Intel plans to build a new plant in Europe, but the exact location has yet to be determined. TSMC is also in the early stages of evaluating its manufacturing facilities in Europe.
This is despite European companies lagging behind in the latest manufacturing technologies. But the EU has several key strengths in the industry, most notably Dutch companies ASML, STMicroelectronics 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.