Taiwanese Govt Welcomes EU's Plans to Fund Local Chip Production

Some of the best CPUs could soon be manufactured in Europe. he European Commission this week gave a green light to the 'Chips for Europe' initiative under which the bloc and the local government will provide semiconductor industry over €40 billion by 2030 to revive the local chip manufacturing. Surprisingly, Taiwanese government was among the first to applaud the move as the EU is considering helping Taiwan-based Taiwan Semiconductor Manufacturing Co. to build a fab in Europe.  

"In the post-pandemic era, Taiwan and the EU have enormous room for cooperation in the restructuring of global supply chains such as semiconductors, industrial recovery, and strengthening of democratic resilience," a statement by Taiwan's Foreign Ministry published by Reuters reads. 

For Europe, collaboration with semiconductor market leaders like Intel and TSMC is a good way to increase local chip production. While Intel is picking up a site for its next production campus in mainland Europe, TSMC last year began to consider Germany as the location for its first fab in Europe. The new European semiconductor plan specifically mentions Taiwan as one of the bloc's 'likely minded partners.' 

The Chips for Europe initiative — also known as the EU Chips Act — proposes investing €11 billion until 2030 (from EU and member states budgets) in pilot lines and design platforms required to bring leading-edge semiconductor process technologies from the lab to the fab. 

In addition, the project calls on member states to invest €30 billion in a new important project of common European interest (IPCEI) and mega fabs — semiconductor production facilities with a production capacity of over 25 thousand wafer starts per month. To enable such incentives by member states governments, the EU needs to ease its regulations. 

There are several companies that already make chips in Europe. GlobalFoundries operates its Fab 1 near Dresden, Germany, where it makes chips for cars using specialty technologies as well as low-power chips using its FD-SOI nodes. Intel has a fab near Leixlip, Ireland, where the company intends to produce its leading-edge processors using its Intel 7 and Intel 4 fabrication processes. In addition, companies like Infineon and ST Microelectronics make chips in Germany, France, and Italy. However, Intel and GlobalFoundries have the most advanced fabs and the EU believes that these are not enough to meet growing demand for chips, which is why additional semiconductor production facilities are needed. 

Since Intel needs leading-edge fabrication technologies for its own processors, the company will likely build a leading-edge Intel 25A and Intel 18A-capable fab in mainland Europe, which will be a breakthrough for the bloc that has been lagging behind Taiwan and the U.S. in terms of chip production for well over a decade. 

The situation seems to be a big different with TSMC. The company said that there are not enough clients for leading-edge fabrication technologies in Europe, which is why it makes no sense to build an appropriate fab there. Meanwhile, there are automakers and other customers who use trailing-edge nodes, so it makes sense to build a facility just for these clients. While such a fab will not advanced Europe's semiconductor capabilities, chips are important for automakers and the latter are crucial for economy.  

It is necessary to note that no formal decisions which companies to support and which endeavors to fund have been made yet, so right now the EU Chips Act is merely a declaration of intent rather than a set of actual projects that will be financed by the EU and member states.