EU Proceeds with $47 Billion European Chips Act

Intel
(Image credit: Intel)

The European Union has agreed on the plan to invest €43 billion ($47 billion) in its semiconductor sector in a bid to significantly increase production of chips locally and bring in advanced fabrication processes to its member countries. The move is also designed to build up the local semiconductor supply chain and avoid chip shortages for important sectors such as automotive.

"We have a deal on EU #ChipsAct," Thierry Breton, European Commissioner on internal markets tweeted. "In a geopolitical context of de-risking, Europe is taking its destiny into its own hands. By mastering the most advanced semiconductors, EU will become an industrial powerhouse in markets of the future."

Nowadays only around 10% of chips produced globally are made in the European Union. Meanwhile, most of the chips for EU's automotive, IT, and telecom industries are made outside of Europe, which creates challenges for companies like Ericsson, Volkswagen, and Nokia. The European Chips act is designed to increase the share of chips produced in the EU to 20% (by value) by 2030.

One of the things that the European Union is particularly concerned about is that all advanced processors, such as those that power world's fastest supercomputers (including Finland's Lumi, the most powerful supercomputer in Europe) are made either in the U.S., Taiwan, or South Korea. The European Chips Act is designed to lure chip manufacturers with leading-edge process technologies to the bloc.

Meanwhile, it's not just leading producers who will get money from the EU. While originally the European Commission suggested financing solely state-of-the-art fabs, by now EU authorities and legislators have expanded the range to encompass the entire value chain, incorporating mature chip production and research and development centers, reports Reuters.

"The European vision to double our global market share by 2030 to 20%, and produce the most sophisticated and energy-efficient semiconductors in Europe, is already attracting substantial private investment," Breton said in a statement published by Bloomberg. "Now we are mobilizing considerable public funding and the regulatory framework to turn this vision into reality."

In the past, year EU member countries have already done quite a lot to attract leading chipmakers. Intel will continue to use its most advanced production nodes at its Ireland fabs and will build an all-new production campus in Germany, where it will make its most advanced processors.

"We have a Chips Act," said Margrethe Vestager, Executive Vice-President of the European Commission for a Europe fit for the Digital Age, in a Twitter post. "We need chips to power digital and green transitions or healthcare systems. Lots of promise and a lot of day-to-day convenience. Today's Trilogue agreement boosts EU capacity to produce our own chips. And to be a partner in the global chips supply chain."

By now, all major chip producing countries, including Taiwan, South Korea, Japan, and the U.S., have either legislated their semiconductor funding laws, or are about to pass them. As a result, it's not going to be easy for EU to catch up with the market leaders.

Anton Shilov
Freelance News Writer

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.

  • ezst036
    It's a wonderful decade for the lobbyist business.
    Reply
  • mitch074
    DavidMV said:
    I think they might be too late for this decade. The US beat them to the punch and with the massive downturn in the semiconductor sector there is little appetite to do any more than what is already planned.
    A lot of the essential hardware needed for these top of the line US chips is made in Europe. Also, ARM is English. Send some cash their way with conditions, and you may get a wholly European made top of the range chip out. Note that the article did mention low power chips - which include ARM, and also RISC-V.
    Reply
  • jkflipflop98
    DavidMV said:
    I think they might be too late for this decade. The US beat them to the punch and with the massive downturn in the semiconductor sector there is little appetite to do any more than what is already planned.

    This is why not everyone gets to be the CEO. You would wait until there's a demand for devices, then start to spend money. At that point you're too late and your business just failed. Uh oh.

    In 2-3 years from now there's going to be a massive boom cycle. The servers and laptops and clients all the businesses purchased for COVID will be getting long in the tooth and need replacement. Cell phone / headset demand for server chips is unrelenting. Home users will be about ready for an upgrade. Boom.

    But you have to start getting ready right now. It takes years to build a factory and hire the staffing needed to run it and install the equipment and train all your new hires. We're looking at three years from now and that's still a damned tight timeline to get a fabrication facility up and running. Even for Intel - who's done this 20 times and has proven plans and procedures in place for starting up a new facility and an existing manufacturing network to lean on for support - getting our Ohio plant functional in time is going to be a tight race.
    Reply
  • bit_user
    mitch074 said:
    Also, ARM is English. Send some cash their way with conditions, and you may get a wholly European made top of the range chip out.
    ARM has design centers in the US (Austin, TX) and I think also France. I believe the French team designed the A510 core, for instance.

    In case you missed it or don't recall, the (patented) IP contributed by the US employees is how the US was able to restrict sales & support of ARM IP in China, in spite of ARM being UK-based and Japanese-owned.
    Reply
  • Elusive Ruse
    It's about damn time, China has been subsidising their industries forever giving them an advantage for decades.
    Reply
  • Elusive Ruse
    bit_user said:
    ARM has design centers in the US (Austin, TX) and I think also France. I believe the French team designed the A510 core, for instance.

    In case you missed it or don't recall, the (patented) IP contributed by the US employees is how the US was able to restrict sales & support of ARM IP in China, in spite of ARM being UK-based and Japanese-owned.
    ASML deserves a mention here too.
    Reply
  • BogdanH
    Agree with comments so far.
    I think the problem in Europe is mentality:
    -US: great idea, let's make money with that!
    -China: great idea, let's make it cheaper!
    -Europe: is not a bad idea, but who would buy that?

    A fact, that EU (commissioner) need to practically push the progress, confirm how EU "works". I'm pretty sure there are great minds in Europe, but not much sense for business. And Europe woke up too late to significantly change the situation... it's so easy to make money by rebranding imports from China.

    Just my 2c
    Reply
  • bit_user
    BogdanH said:
    I'm pretty sure there are great minds in Europe, but not much sense for business.
    ASML is based in Netherlands, as is NXP. GlobalFoundries has a fab in Germany, and there's Siemens. ARM and Imagination are both based in the UK. There's even an embedded GPU company in Greece, whose name escapes me.

    It's not as if Europe is devoid of semiconductor businesses. Perhaps it fits in with a general pattern of under-investment in manufacturing, in the West.
    Reply
  • BogdanH
    Could be I'm (as consumer) too narrow minded in this regard... It's about dependency, which was the reason for that EU initiative. I'm aware that it's hard to expect Europe (or any place) to be fully self sufficient. Each country has limitations (i.e. in natural resources) or it just doesn't make economic sense.
    But situation now here in Europe almost equals to panic. There's no "famous" consumer product that is is actually made in Europe -and consumer is actually the source of money. Everything is imported and rebranded.
    I.e. Germany has only one working facility that makes silicone wafers. It has four ovens, but right now, only one works (because of high energy costs) and even that one is about to be shut down. Cheap energy from solar panels? Yes, but (again) all panels need to be imported.
    Just recently Europe realized that India is about to become a 4th hi-tech super power in the world -what a surprise all of sudden! Progress is like a river: boat doesn't stay in place if you don't paddle -you move backwards.
    Yes, there are very successful hi-tech companies in Europe. But as it turned out, that's just not enough.
    I live in Europe and of course I wish and hope things to change. It would be nice to see "Made in Europe" actually means something again.
    Reply
  • mitch074
    bit_user said:
    ARM has design centers in the US (Austin, TX) and I think also France. I believe the French team designed the A510 core, for instance.

    In case you missed it or don't recall, the (patented) IP contributed by the US employees is how the US was able to restrict sales & support of ARM IP in China, in spite of ARM being UK-based and Japanese-owned.
    Yeah, well, France is in the EU (UK isn't) so that's even better. Also, depending on the patent, software patents are not recognized in Europe and hardware ones can be circumvented.
    As for ARM complying with the USA's injunction, you'll have to point it to me : AFAIK ARM China is now and independent entity from ARM Ltd but still collects licensing fees from Chinese companies using ARM IP in China. I may have missed something about that, you got a link I could read up on? It's actually interesting to me.
    Reply