The European Commission (EC) recently proposed a plan, dubbed , to increase Europe's global contribution to semiconductor manufacturing by 2030.
This proposal comes at a time when there have been significant supply failings within the global chip industry with even the biggest chipmakers failing to meet demand from customers in critical industries like automotive and consumer products.
The EU's current progress toward the 2030 targets for an “inclusive and sustainable digital society.” Image used courtesy of the
In addition, the COVID-19 pandemic has highlighted just how much the EU relies on key technologies owned by U.S. and Chinese companies.
Ramping Up EU Chip Production
“It is our proposed level of ambition that by 2030 the production of cutting-edge and sustainable semiconductors in Europe including processors is at least 20% of world production in value,” reads an .
In 2020, only 10% of the global production of computer chips took place in the EU. By doubling this to 20% by 2030, the EU hopes that it can become less reliant on technologies that have traditionally been manufactured outside of the trading bloc and .
According to the plan, European officials also want to dilute the dominance that U.S. and Chinese companies have in the chip manufacturing (and the wider tech) space overall. Of the world’s , only one is based in the EU—NXP Semiconductor of the Netherlands, which is the 10th largest.
|1.||Inter (Santa Clara, CA)|
Taiwan Semiconductor Manufacturing Co. (TSMC) (Hsinchu, Taiwan)
|3.||Qualcomm (San Diego, CA)|
|4.||Broadcom (San Jose, CA)|
|5.||Micron Technology (Boise, ID)|
|6.||Texas Instruments (Dallas, TX)|
|7.||ASE Technology Holding Co. (Kaohsiung, Taiwan)|
|8.||NVIDIA Corp. (Santa Clara, CA)|
|9.||STMicroelectronics (Geneva, Switzerland)|
|10||NXP Semiconductors (Eindhoven, Netherlands)|
Top 10 chipmakers as of July 2020. Data pulled from
The EU’s latest effort to claim digital sovereignty is hardly new; it has been a talking point for several years now. However, the GDPR—which gives Europeans greater control over their data—has largely been seen as a turning point, and many Member States are now being pushed from merely talking about taking action to actually doing it.
Playing Politics with Silicon
Doubling the amount of chip production that goes on inside the bloc will be a mammoth undertaking, however.
One of the biggest challenges will be that both the , and both nations arguably have the capacity to do so and dwarf the EU in the process.
The U.S. has already restricted China’s access to chips involving U.S. intellectual property on the grounds that they could be used by the Chinese military.
Last year, China’s SMIC was among 60 firms put on a blacklist by the U.S. government. This move could affect the company’s R&D and production capacity of chips on 10nm process nodes and below and has forced China to take action. According to its , China says that it will focus on research and development in integrated circuit (IC) design tools, key equipment, and key materials.
According to a recent report prepared for President Biden, the administration should be taking steps to ensure that China is .
President Biden at a press conference on the global chip shortage. Image used courtesy of Jonathan Ernst and
Efforts like these to increase domestic chip production by the U.S. and China (and now the EU) have been described as the “” by ON Semiconductor’s Keith Jackson. But does the EU stand a realistic chance of competing on the same scale?
How Can the EU Compete?
Once upon a time, Europe had a thriving chip industry. Over the years, however, European firms have outsourced more and more of their production. This includes both NXP Semiconductor and Infineon Technologies, the two most recognizable European chipmakers.
It’s not as if chip fabs can be thrown up overnight, either. According to the U.S. Semiconductor Industry Association (SIA), . Once a facility is built, it can take several years before it becomes profitable. These costs are also rising as chip generations grow more advanced and are built on smaller process nodes.
Rendering of TSMC's Fab 18, which is a 5 nm production facility. Image used courtesy of
There’s a reason that NXP and Infineon have elected to outsource their chip production to the likes of TSMC—one of the top chipmakers in the world. It, therefore, seems unlikely that EU firms could be encouraged to bring their manufacturing back in-house. But what about bringing a TSMC or Samsung fab to Europe? Both companies have demonstrated their willingness to build international facilities in and respectively.
Thierry Breton, the EU's internal market commissioner, has previously argued for a major new fabrication plant to be built inside the bloc but acknowledged at the time the EC report launched that it was not yet clear whether this would involve trying to convince TSMC, Samsung, or another major chipmaker to establish a European site.
“Europe has woken up to the reality of the US-China technology 'war' should play on its strengths to reduce its vulnerabilities to future shockwaves,” reads .
Under the 2030 Digital Compass plans, the EC will push individual Member States into action by conducting annual progress reviews but is letting national governments act autonomously in taking steps to increase chip production.
Featured image (modified) used courtesy of Francois Lenoir and