Back in the early 90s, Europe produced over 40 per cent of world’s microchips. Today, the EU’s share stands at just 10 percent, with the region relying heavily upon semiconductors manufactured in Asia and the US to meet its growing tech requirements. Reports show Taiwan, South Korea and Japan currently account for about 60 percent of global semiconductor production.
The shift away from manufacturing chips within Europe has been put down, in part, to issues regarding raw material sourcing; the region does not have ready access to the stores of rare earth minerals required to make chips. Earlier this year, European Industry Commissioner Thierry Breton told Bloomberg the bloc had been “too naïve, too open” over recent decades – having outsourced much of its design and manufacturing.
Whatever the reasons, the EU is no longer content to let the situation continue. In her State of the Union address held on 15 September in Strasbourg, President of the European Commission, Ursula von der Leyen, highlighted the need to redress the global tech balance in light of recent chip shortages, and for the EU member states to come up with a coherent strategy to tackle the problem.
“Digital is the make-or-break issue,” she said. “There is no digital without chips. And while we speak, whole production lines are already working at reduced speed – despite growing demand – because of a shortage of semi-conductors.
“But while global demand has exploded, Europe‘s share across the entire value chain, from design to manufacturing capacity has shrunk. We depend on state-of-the-art chips manufactured in Asia. So this is not just a matter of our competitiveness. This is also a matter of tech sovereignty. So let‘s put all of our focus on it.”
Von der Leyen went on to state that the Commission will “present a new European Chips Act” which would link together the bloc’s research, design and testing capacities.
“The aim is to jointly create a state-of-the-art European chip ecosystem, including production. That ensures our security of supply and will develop new markets for groundbreaking European tech,” she explained, while admitting that this was “a daunting task”.
“…I know that some claim it cannot be done. But they said the same thing about Galileo 20 years ago. And look what happened. We got our act together. Today European satellites provide the navigation system for more than 2 billion smartphones worldwide. We are world leaders. So let‘s be bold again, this time with semi-conductors.”
Establishing cutting-edge semiconductor manufacturing in the EU was already part of the Commission’s 2030 Digital Compass decadal plan. The bloc aims to double its share of the world’s chip market to 20 percent and to operate semiconductor fabrication plants with 2nm process nodes by the end of this decade.
So what exactly will the new ‘Chips Act’ look like? In a blog post commenting on the announcement, Thierry Breton stated his belief that the new Act should cover three dimensions:
- A European Semiconductor Research Strategy
- A collective plan to enhance European production capacity
- A framework for international cooperation and partnership
The region is not looking to become entirely self-sufficient, however – at least according to EU’s digital and competition chief, Margrethe Vestager, who was interviewed to the New Statesman about the plans.
“What is important is of course access… Europe has a stronghold in the machinery producing chips,” Vestager was quoted as saying. “We have a stronghold in research … But there are other things that we don’t have. We don’t have a giant chip producer of the smallest chips, and we don’t necessarily have access to all the raw materials for producing chips.”
