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EU Official: Semiconductor Independence Is Impossible

Silicon wafer
(Image credit: TSMC)

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.

Anton Shilov
Anton Shilov

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • logainofhades
    Maybe they should make it a more attractive place to do business.
    Reply
  • ravewulf
    logainofhades said:
    Maybe they should make it a more attractive place to do business.

    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.
    Reply
  • kaalus
    If you spend the lion share of tax take on "social issues" there is nothing left for moving humanity forward. This truth often escapes hardcore socialists, who think current status quo is the peak of human scientific and technological development, and we should concentrate our efforts on distributing* the fruit of what we have already achieved. Further advancement has been left for China, Korea, Taiwan to work on.

    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
    Reply
  • elementalRealms
    kaalus said:
    If you spend the lion share of tax take on "social issues" there is nothing left for moving humanity forward. This truth often escapes hardcore socialists, who think current status quo is the peak of human scientific and technological development, and we should concentrate our efforts on distributing* the fruit of what we have already achieved. Further advancement has been left for China, Korea, Taiwan to work on.

    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 .
    Reply
  • Why_Me
    ravewulf said:
    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.
    The EU makes the mafia look like small potatoes when it comes to running a protection racket.
    Reply
  • Why_Me
    elementalRealms said:
    Meanwhile German Industry beats all US industry ... you are living in debts and your country will collapse without bullying other nations resources .
    German industry relies heavily on Russian gas hence the reason Merkel & Co. suck up to the Kremlin. Lest we forget former German Chancellor Gerhard Schroeder.

    https://en.wikipedia.org/wiki/Gerhard_Schröder
    Reply
  • watzupken
    In my opinion, this is true. In the first place, countries are outsourcing for 2 reasons, (1) price, and, (2)expertise. Foundry business typically don't sit in EU, and not in big numbers as compared to the likes of US, Taiwan, and China. Cost of manufacturing in EU is typically higher, even though they have some nations within EU that isn't that expensive. However, the second problem is expertise, which they will not be able to overcome in the short term.
    Reply
  • hotaru251
    i mean afaik no real need for (most) of EU to become self reliant.

    unlike china/usa/russia no real animosity towards them from other producers of said chips.
    Reply
  • Why_Me
    hotaru251 said:
    i mean afaik no real need for (most) of EU to become self reliant.

    unlike china/usa/russia no real animosity towards them from other producers of said chips.
    Unlike the USA, Russia, and China the EU has no real military. Seeing how the EU has no military their opinion means nothing in the real scheme of things.
    Reply
  • m3city
    Why_Me said:
    Unlike the USA, Russia, and China the EU has no real military. Seeing how the EU has no military their opinion means nothing in the real scheme of things.

    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.
    Reply