The European Union consumes hundreds of millions of chips every year, but only a handful of them are made within the bloc. Although countries like Germany are encouraging chipmakers to build fabs there, it is unlikely that the EU will ever become completely independent from other countries as far as semiconductor supply is concerned. That is according to Margrethe Vestager, EU's Commissioner for Competition.
Leading contract makers of semiconductors -- such as Intel, Samsung Foundry, and Taiwan Semiconductor Manufacturing Co. -- spend around $30 billion per year on capital expenditures and billions on developing new process technologies. Analysts believe that a country, or a group of countries, that wants to build a competitive semiconductor industry locally would need to spend over $150 billion over a period of five years on direct help, tax breaks, and incentives. However, the chances of success are extremely low.
The EU official believes that such investments are impossible to make, which is why the bloc will continue to rely on internal and external chip supply.
"The numbers I hear of, sort of, the upfront investments to be fully self-sufficient, that makes it not doable," said Vestager in an interview with CNBC. "What is important is that there is a different level of production capacity in Europe."
It is noteworthy that Europe does not produce smartphones or PCs, two kinds of applications that need chips made using leading-edge fabrication technologies. Meanwhile, the EU produces cars, consumer electronics, and other things that do not need chips made using the latest nodes. Thus, the bloc wants to expand production of chips for these products to protect its economy. It also does not want supply chains to be disrupted by China or tensions with the U.S. and Germany.
"You would need a lot of chips that come from legacy technology, a lot of the chips that goes into sort of internet of things, your fridge, your coffeemaker, that's legacy technology, and it will take quite some time because that sort of migrates into leading edge," said Vestager.
At present, about 10% of the global chip supply is produced in Europe, down from 40% in 1990. The current goal that the block has is to expand its global chip production market share to 20% by 2030, which is already a very ambitious goal as chip manufacturing is growing. Vestager admits that to accomplish this goal, the EU needs to support local makers of semiconductors. Unfortunately, Margrethe Vestager does not announce any particular plans at this time.
This statement is completely irrelevant to the issue and, might I add, usually just an excuse to make things worse for workers and/or consumers. They already have businesses of their own and don't need to become a picture of crony capitalism run amok like we have in the US.
I'm glad to see Margrethe Vestager understands the complexities of the issue. Although it would be best to spread out production to different regions, it is unlikely and impractical to be completely independent from the global economy - especially when it comes to modern chip production.
This can only last so long, until the advantage we have created in XIX and XX centuries evaporates, and we will become colonies of the more technologically advanced nations. Best get your children to learn Chinese quick, they will need it to better serve their new overlords in a few decades time.
(*) no one has figured out yet how to distribute without creating massive corruption proportional to the amounts distributed
Meanwhile German Industry beats all US industry ... you are living in debts and your country will collapse without bullying other nations resources .
unlike china/usa/russia no real animosity towards them from other producers of said chips.
Really? For global conflicts there is NATO. Each european country has their own army to defend in case of local conflicts. But thanks to EU, that arose from industral/resource trade agreement, there was no war here. And there wont be, at least between EU countries. While Ukraine is not part of EU, it is a perfect example how a relatively small country can defend itself from a much stronger aggressor. Granted, they got a lot of support from western europe.
For your information, so called EU military is in works. Not to mention that real cooperation, common trainings, information exchange between countries have been going on for the last 30 years.