A top EU official said that the EU has been too naive to outsource much of its semiconductor design and manufacturing work in the last few decades.
|European Industry Commissioner Thierry Breton speaking at the Digital Life Design creative conference on January 19, 2020 in Germany. (Photo: DPA)|
European Industry Commissioner Thierry Breton said that it is possible to overcome imbalance in semiconductor production. The global chip crisis affecting electronics suppliers and car manufacturers is evidence that it’s time to take action.
Breton, former CEO of IT firm Atos and operator France Telecom, said he wanted to return to the same market share in semiconductor manufacturing as before. In the past few years, Europe’s semiconductor manufacturing has fallen sharply because the region is “too naive and open,” he said in an interview.
In March, the European Commission (EC) announced a strategy to double the market share of chip manufacturing to at least 20% by 2030. The strategy includes forming an alliance of semiconductor companies and research centers. leading the continent, as well as governments. At least 22 countries have signed the intent to mail.
The alliance has a decisive role in how to promote the design and manufacture of 20nm and 10nm chips. These are all more advanced chips than most currently manufactured in Europe. Along with that, the EU will plan to produce new generation chips before 2030. Officials are aiming to produce chips below 5nm to less than 2nm. The target is considered ambitious, even leading companies such as TSMC (Taiwan), Samsung Electronics (Korea) have not been achieved.
Years ago, Europe controlled the majority of global semiconductor manufacturing. In 1990, Europe’s market share was about 44%, but it is now close to 10%. Taiwan, South Korea and Japan account for about 60%, according to data from the Boston Consulting Group and the Semiconductor Industry Association. European chip designers such as NXP Semiconductors, Infineon Technologies all hire TSMC and other outsourcing companies.
According to Director of Technology and Geopolitics Jan-Peter Kleinhans of Stiftung Neue Verantwortung, the decline of consumer technology brands such as Nokia and Ericsson is part of the cause of supply chain shifts. Although the car industry is still strong, it is suffering from a shortage of chips. Ford Motor said it had to suspend production at factories in Germany for several weeks because of a shortage of semiconductors.
The crisis highlighted Europe’s reliance on foreign business for vital supplies and spurred its ambitions to resilience. But their plans to produce chips under 5nm are so ambitious that the region needs support from international players like TSMC. Mr. Breton admitted that in order to achieve the goal, it is better to work with partners. He likens chip manufacturing under 2nm to “traveling to the moon”.
Intel supports the EU plan. The company is now expanding its 7nm chip production line and is considering building the newest factory here. However, they also have difficulty in modernizing production. CEO Pat Gelsinger suggested last week that there is a need for huge financial support from the European government. Asian companies are often financed nearly 40% of the cost of building new factories, which cost at least $ 10 billion, an Intel spokesperson pointed out. It is not clear how much money Europe will spend to regain the power of chip manufacturing.
On Financial Times“The EU owns a number of champions in the semiconductor industry but faces fierce competition from countries that view chip manufacturing as a national priority,” wrote Intel CEO. These governments are offering generous incentives to attract semiconductor production. “Europe must keep up to have the opportunity to compete,” Mr. Gelsinger said.
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