The semiconductor market could become a trillion-dollar industry by 2030, according to estimates by international consulting firm McKinsey. The world center of chip production is Taiwan, with cutting-edge technologies such as the production of semiconductors below ten nanometers, Taiwan holds more than 90 percent of the global market share.
Last but not least, the bottlenecks related to the pandemic have prompted many countries to step up their chip production. Semiconductors can be found in almost all technical products, for example in cars and smartphones, but also in wind turbines and refrigerators. Chip production thus also plays an important role in the energy transition and digitization projects.
At least 81 new chip factories are to be built between 2021 and 2025. According to data from the semiconductor industry association SEMI in September, ten of the production facilities are to be built in Europe, 14 in the USA and 21 in Taiwan.
EU Commission wants to pump 43 billion into chip industry
At the beginning of the year, the EU Commission announced that it would mobilize around 43 billion euros for the chip industry with the “Chips Act”. By 2030, the aim is to increase the EU’s market share in global chip production to 20 percent, i.e. more than double it. With the investments, Brussels also wants to persuade large chip manufacturers to build factories in the EU. As part of an investment by the US chip giant Intel, two huge new semiconductor factories are being built in Germany.
The EU Parliament must first approve the Commission’s plan before details can be negotiated with the member states. For example, European lawmakers have warned that the EU’s plans for chips will eat up funding for other potential projects, Politico writes. Karlo Ressler, the lead MP on the issue, said it was “regrettable” that the budget for chips was based on taking money from other areas.
Sophisticated chip manufacturing facilities are one of Europe’s hidden strengths, writes the Financial Times (“FT”). But the infrastructure in Europe is still incomplete. Because the manufacturing factories are basically broadly based and well networked, but Europe still has catching up to do, especially in the area of development and research.
Lack of staff slows down development
The chip development capacities in Europe are limited both in their presence and in their scope. Last but not least, the reason for this is the lack of staff.
Companies such as Germany’s Infineon, Edwards Vacuum in the UK and AT&S in Austria, one of the leading suppliers of high-end chip substrates on which semiconductors are mounted, have all warned that foreign talent is crucial to the further development and sustainability of Europe’s semiconductor industry will be.
AT&S CEO Andreas Gerstenmayer told the FT that his company was having trouble finding the 800 skilled workers it needed for its new research and development center in Austria. AT&S has to look for talent worldwide because the domestic experience and technology are not yet available.
Also geopolitical competition
At the moment, a large part of the chip production, especially in the case of the most powerful semiconductors that are installed in laptops and mobile phones, takes place in Asia. The world’s largest chip manufacturer is TSMC. For the USA and Europe, however, Taiwan is particularly problematic as a location due to the conflict with China.
Because the fear of a Chinese military intervention in Taiwan is growing, not least in connection with the Ukraine war. The US government has therefore issued numerous sanctions – including a chip export ban – against China, also to prevent the military use of semiconductors produced with American technology. As a reaction to the embargo, China wants to support its chip industry with the equivalent of 136 billion euros.
At the same time, the USA and Japan also want to create incentives for the expansion of chip production in their countries. The USA put together an investment package of around 49 billion euros. The Japanese joint venture of technology companies such as Sony and NEC, Rapidus, intends to set up a production facility for state-of-the-art computer chips in Japan in the coming years together with the US technology group IBM. Rapidus boss Atsuyoshi Koike put the expenses for the cooperation at the equivalent of several billion euros.
