EU wants to be back at the top of the world in semiconductor production

EU wants to be back at the top of the world in semiconductor production

Dhe bottlenecks in the Corona crisis made it painfully clear to car manufacturers and the rest of the industry how dependent they are on Asia for the semiconductors that are indispensable today. There is also a growing fear that China could use such dependencies strategically against the West. The United States is therefore promoting the production of its own chips with state aid in the tens of billions.

the European Union don’t want to be left behind. The responsible ministers therefore want to pave the way for the “EU Chips Act” in Brussels on Thursday, which is intended to promote the development of manufacturing in the EU. The EU wants to double the market share in chip production worldwide to 20 percent by 2030. In a growing market, this corresponds to four times the current production.

Generous government aid

The EU wants to provide a total of 43 billion euros for this. But something else is more decisive: the rules for granting state aid are being relaxed in order to encourage generous investment support. Originally, this was primarily intended to promote the construction of factories that produce state-of-the-art chips with the smallest structure sizes – such as in Magdeburg, where Intel wants to build several such plants for around 17 billion euros. Lead Internal Market Commissioner Thierry Breton spoke at the presentation of the “Chips Act” in February of microchips with node sizes of five, three, two nanometers and less.

For German industry, that was a completely wrong focus. Chips with structure sizes of less than 16 nanometers make up only 4 percent of the world market, argued the CEO of the Siemens group, Cedrik Neike, in the FAZ The focus of the “Chips Act” must be expanded so that industrial chips can also be promoted. The industry has found open ears in the EU Member States. They have changed the Commission’s draft so that many more projects can now be funded by the states with billions, whether for the in-house production of chips, as in the case of Intel, or for contract manufacturing, as is the case with TSMC from Taiwan. Crucial to this was the broadening of the definition of what types of chips are considered “first-of-a-kind” in the EU.

compromise found

The compromise text drawn up by the Czech EU Council Presidency makes it clear that not only particularly small chips or chips that are produced in a particularly energy-efficient manner – as proposed by the Commission – are innovations, but that “innovations can have many dimensions”. This can affect the production, the material of the chips or approaches to improve security and computing power. The text also mentions the integration of new functions such as artificial intelligence (AI) and new processes to increase efficiency or to automate packaging and assembly as examples of innovations. In addition, environmental benefits such as a quantifiable reduction in the consumption of energy, water or chemicals or better recyclability of materials can be claimed. However, the decision of the ministers does not change the fact that the semiconductor law will be provided with significantly less money compared to the initiatives of the USA and above all China.

You can only get 43 billion euros if you combine money from existing programs and national and private investments. Of this, 11 billion euros will come from the EU itself for the “Chips for Europe” initiative. The US, meanwhile, is providing more than $50 billion in fresh money for its Chis Act. In addition, there would be further funding of 82 billion dollars for research and development, the Federation of German Industries (BDI) calculates. The EU is threatening to lose out in a real subsidy race. After all, the US government also wants to provide 500 billion dollars in tax breaks and state aid with the “Inflation Reduction Act” to promote its economy, which is met with displeasure in the EU. The French President described this as “super-aggressive” during a state visit to Washington on Wednesday.

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