“Being overtaken on the left and right”

Production by AT&S

The Austrian chip supplier is dissatisfied with the government funding for the industry in the EU.

(Photo: AT&S)

Munich, Berlin According to leading industry representatives, the race to catch up in the chip industry announced by the EU at the beginning of the year is not progressing. “Europe is the announcement world champion and implementation dwarf,” said Andreas Gerstenmayer, head of the Austrian technology group AT&S, the Handelsblatt.

The EU has been debating subsidies for the semiconductor industry for months, with no result so far. Meanwhile, other nations have already decided on funding programs worth billions. “We are being overtaken left and right, including by countries like South Korea and Japan, which are smaller than the EU,” criticizes Gerstenmayer.

In addition, the Chips Act proposed by the EU Commission, which is intended to enable subsidies of 43 billion euros, is also far too small, according to the manager: “The sum is far too small to make a difference on a global scale.” AT&S supplies the semiconductor industry with so-called IC substrates. These are connecting elements between circuit board and chip. Best known customer is Apple.

TSMC prefer to build in the United States

Time is of the essence. Because the world’s leading chip companies are just deciding where to invest their billions in the next few years. So far, Europe has only played a minor role in the plans. TSMC from Taiwan recently announced plans to build another plant in the USA. The largest contract manufacturer in the semiconductor industry is already building a $12 billion factory in Arizona. The Taiwanese are also investing seven billion dollars in a new location in Japan.

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It is true that Europe can also record successes. Have so intel and Infineon announced new plants worth billions in Germany this year. But the chip manufacturers’ planned investments are subject to the condition that the billions provided for in the Chips Act actually flow.

>> Read here: Paradoxical chip world Industry is struggling with overproduction and supply bottlenecks at the same time

“We rely on appropriate funding,” said Infineon CEO Jochen Hanebeck last week. However, the manager did not want to give any details. Want five billion euros Infineon spend on the new factory. The manager added: “We are in contact with the authorities.” If the group owner agrees with the state on financial support, the excavators should arrive in the autumn of next year.

Chip industry: Industry association Silicon Saxony calls for more speed

Frank Bösenberg, Managing Director of the Silicon Saxony industry association, demands: “The EU must quickly come to an agreement on the Chips Act. Because we need dozens of such plants in Europe.” Even a high-ranking representative of the federal government warns: “The support for the semiconductor industry must not remain a word for Sunday.” There is a real threat that Germany will eventually be without the required chips due to its dependence on Asia standing there

The new factories planned in Europe to date are far from sufficient to achieve the goal set by Commission President Ursula von der Leyen. According to this, by the end of the decade, 20 percent of all chips worldwide will come from European factories, more than twice as many as before. Since the semiconductor market will simultaneously grow rapidly according to forecasts by leading market researchers, the EU will have to quadruple its capacities by 2030. The aim is to make Europe less dependent on deliveries from the Far East. For almost two years now, the automotive industry in particular has been suffering from the fact that contract manufacturers in Asia do not have sufficient capacity.


However, the Chips Act will not be passed until the beginning of next year at the earliest. In the meantime, the “second IPCEI Microelectronics” is intended to help, a funding program that is intended to promote projects in the chip industry that are important for Europe. The federal government selected 32 projects from Germany at the end of last year and submitted them to Brussels for approval. According to government circles, the EU Commission should have given its approval in the autumn, or in the winter at the latest.

In the meantime, however, the federal government is expecting the approvals to come in the first quarter of 2023 at the earliest. “You can’t really blame the Commission, because of the German energy crisis, Brussels has a continuous flow of applications from Germany on its desk,” says a government representative. On the other hand, one has to ask oneself how the desire to catch up technologically and the long waiting times fit together.

AT&S is looking around America

Some experts, meanwhile, warn against subsidizing factories that Europe doesn’t need at all because there is no market. For the new work of intel in Magdeburg, for example, there are not enough buyers in the EU, criticizes Alan Priestley from market researcher Gartner.

Because the electronics production is located in Asia because of the lower wages. From 2027, Intel wants to produce the world’s most advanced processors on the Elbe, which are used in particular for computers and smartphones.

>> Read here: Infineon anticipates a sharp increase in demand for radar chips

Intel argues that the world market is served from Saxony-Anhalt. And the buyers of these sophisticated chips are apparently quite interested in purchasing components from all regions of the world. Apple-Boss Tim Cook told employees during a visit to Munich that he would also buy semiconductors from European plants, the Bloomberg news agency recently reported.


So far, the iPhone manufacturer’s processors have come from TSMC in Taiwan. According to the report, Cook explained that 60 percent of all processors worldwide came from the island, but that was too risky in the long run.

AT&S is currently massively expanding its headquarters in Leoben, Austria. 500 million euros flow into a research and development center. However, CEO Gerstenmayer leaves open whether the company will continue to expand in his home country: “We are examining whether to invest in America as part of the US Chips Act. The conditions there are now extremely attractive.”

More: Infineon competitor Wolfspeed is considering building a chip factory in Germany

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