With many billions, Europe aims to become more independent with regards to semiconductors. The goal is to double the global market share in chips from 10 to at least 20 percent by 2030. But not all share this optimism.
Europe is highly dependent on chips from Asia and the USA. Of the USD 580 billion worth of semiconductors produced in 2020, just ten percent came from the EU. The consequences of this came to light during the coronavirus pandemic: Supply bottlenecks and even interruptions in the industry and other strategic sectors such as health, defense and energy. Another threat is that, against the background of growing geopolitical tensions, semiconductor production is increasingly serving strategic goals. This development is being further fueled by the high demand for microchips, which remains undiminished.
ZVEI expects the global semiconductor market to double to USD one trillion by 2030. The long-term demand for chips remains high, especially in the feature sizes relevant for the automotive and industrial markets. Digitalization and green transformation are also driving this growth.
To cover the growing demand and strengthen the overall semiconductor value chain, the “EU Chips Act” now aims to double the European world market share from the current 10 percent to 20 by 2030.
According to Bitkom, this support for the European semiconductor industry is long overdue. And the announced EUR 43 billion, of which only 3.3 billion comes from the EU budget and the rest from public and private pots, is comparatively small. After all, the US Chips Act of 2022 includes an investment volume of around USD 52 billion. And the Chinese government is estimated to be pouring USD 150 billion into its semiconductor industry by 2025. Europe is thus comparatively late and is “stingy” with its resources. Rapid implementation will therefore be all the more important.
In concrete terms, delays could jeopardize Intel’s EUR 17 billion factory plans in Magdeburg. The first next-generation chips are to role off the production line there by 2027. According to the Minister President of Sachsen Anhalt, Reiner Haseloff (CDU), the adoption of the Chips Act represents a new legal basis for the payment of necessary subsidies, without which it would not be possible for relevant companies to set up shop.
This is already happening elsewhere. For example, the groundbreaking ceremony for a EUR 5-billion plant by Infineon recently took place in Dresden. The group is building a 300-millimeter smart power factory for analog/mixed-signal technologies and power semiconductors. This combination enables particularly energy-efficient and intelligent power supply solutions.
The US Group Wolfspeed – a market leader in silicon carbide (SiC) and gallium nitride (GaN) technologies – is also investing in Germany. In Saarland, EUR 2.75 billion – the majority of which is subsidized – are flowing into the world’s largest plant for SiC power semiconductors. The transmission manufacturer ZF has a minority stake in the factory.
Not everyone is entirely happy with the EU Chips Act. ZVEI, for example, complains that only a small part of the planned EUR 43 billion comprises completely new funds. Funds for research and development, for example, are the result of postponements of funding amounts that have already been planned. In addition, the focus on feature sizes below ten nanometers is too narrow and ignores the needs of the European buyer industry. After all, power electronics and sensors will contribute significantly to the success of the green and digital transformation.
The VDMA also sees mechanical engineering – one of the largest European industrial sectors – needing feature sizes above 16 nanometers by the end of 2030. The focus, they say, should therefore not only be on factories for 2-nanometer chips (“cutting edge chips”), but also needs to reflect the entire breadth of the European industry.