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The EU on Tuesday unveiled a plan to quadruple Europe’s semiconductor supply by 2030, hoping to limit the bloc’s dependence on Asia for a key component used in electric cars and smartphones.
Chip production has become a strategic priority in both Europe and the United States, after the shock of the pandemic stifled supply, grounded factories and emptied product stores.
Semiconductor manufacturing overwhelmingly takes place in Taiwan, China and South Korea and the 27 member states of the European Union want factories and companies inside the bloc to play a bigger role.
The long-awaited EU Chips Act will “mobilize more than €43 billion ($49.1 billion) in public and private investment” and “enable the EU to achieve its ambition of doubling its current market share to 20% in 2030,” the European Commission said. .
“We have set ourselves the target of having 20% of the global market share of chip production here in Europe,” said European Commission President Ursula von der Leyen.
Reaching that level “essentially means quadrupling our efforts” given the huge increase in global demand, she said.
Thierry Breton, the European commissioner for industry, urged Europeans to be as ambitious as possible and to align themselves with similar plans in the United States, where the Biden administration is asking Congress to approve a plan of 52 billions of dollars.
“Without chips there is no digital transition, no green transition, no technology leadership. Securing the supply of the most advanced chips has become an economic and geopolitical priority,” he said.
If approved, the EU plans could generate a total of €43 billion through existing EU budget funds as well as by relaxing existing rules on member states’ public subsidies.
Eleven billion euros of this sum will be new spending to develop state-of-the-art chips, while the rest is an estimate of current EU projects and what individual member states are exploiting to create a new supply of semiconductors.
The proposal will need to be approved by EU member states and the European Parliament, where opinions will vary between the ambitions of industrial heavyweights such as Germany, France and Italy and those of smaller states fearful of shutting down valuable supply chains with Asia.
Critics will also point to part of the plan, pushed by Breton, to set up an emergency mechanism that could control chip exports in the event of a sudden shortage.
Some member states, led by the Netherlands and the Nordics, will also resist any plans to widen the scope of state aid, with the commission planning to make it easier for EU governments to inject money. money to chipmakers.
“We don’t want to end up in a situation where a huge US company gets a lot of money from the EU to open a factory in a big member state,” an EU diplomat said.
But the pressure on Europe to act quickly is strong, with South Korea also promising huge sums of subsidies to expand its chip business.
These payments will likely dwarf anything Europe has to offer. In Taiwan, chip behemoth TSMC plans to spend between $40 billion and $44 billion over the next 12 months on new factories.
With nations keen to increase domestic supply, it seems manufacturers are looking for the best deal as they seek locations for new factories.
Intel, the US-based chipmaker, is set to announce a major investment in Europe, with major destinations possible including Germany, France and Italy.
CEO Pat Gelsinger told German media that his decision hinged not just on issues of suitable locations and personnel “but also on the grants available to build the factories”.
“We have also secured considerable subsidies for our factories in Asia,” Gelsinger said.