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European semiconductor production: The EU does not come into the pots

The EU is standing in its own way in expanding the European semiconductor industry. It wants to invest tens to more than 100 billion euros in order to lure chip manufacturers to Europe with the most modern process technology, but progress is slow, especially in international comparison. For example, Intel and TSMC have already started building new semiconductor plants in the USA with the help of government subsidies, while the EU is still in the decision-making process with Intel as to where a local plant should be built. TSMC has shown only cautious interest.

Politico summarizes the developments of the past months: The EU Commission has only released 3-5 billion euros for the semiconductor industry, an additional 8-9 billion euros come from state investments and a further 6 billion euros from previous EU plans. However, Intel alone estimates subsidies of 8 billion euros for the construction of a production facility costing 20 billion euros.

A major problem is the EU-wide organized bureaucracy. Projects like the construction of a subsidized semiconductor plant have to be put out to tender, the candidates are examined and finally the responsible company has to decide on a location. Then there are also regulations as to what those involved can and cannot do with the funding, and the antitrust authorities have their fingers in the game.

The EU actually wants to invest up to 145 billion euros in the chip market over the next few years, including a large part for the production of semiconductor components. For this undertaking, 17 member states launched the “Important Project of Common European Interest” (IPCEI) Microelectronics II. For funding, the participating countries must first present concrete plans before the EU knits a package of measures.

According to Politico However, the plans of 10 countries do not even mention the term (micro) chips, five more have not yet finalized their plans. Of the countries that have committed funds for chips, only six have a separate budget for semiconductors, while others pool the funds with investments in the cloud, artificial intelligence and other technologies.

The bottom line is Tyson Barker, Program Manager Technology and Foreign Policy at the German Society for Foreign Policy (DGAP): “It is much easier to operate regulatory policy at European level than industrial policy at European level. Because when you make industrial policy, you choose winners and losers the end.”

So it takes a lot of time before the projects become concrete. It therefore remains questionable whether the EU will pump much more than 20 billion euros into the European semiconductor industry in the coming year. The expansion is the EU’s largest investment project to date – and it obviously has to learn how to use it first.


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