The European Commission will introduce legislation next month to make the continent a center of chip expertise and manufacturing.
The EC will propose the European Chips Act in early February, which will boost European infrastructure for the chip manufacturing and supply chain, Ursula von der Leyen, the committee chair, said in a speech to the World Economic Forum on Thursday.
The goal is to increase Europe’s market share of global chip manufacturing to 20 percent by 2030, which would mean quadrupling the EU’s current production, she said, and would involve state aid to build “first of a kind” manufacturing facilities.
EC President Ursula von der Leyen
“Today, most of our deliveries come from a handful of producers outside of Europe. And this is a dependency and uncertainty that we just can’t afford,” said von der Leyen. “We will create more balanced interdependencies and we will build supply chains that we can trust by avoiding single points of failure.”
Europe today relies heavily on factories in Asia for its chip supplies, with shipping and fuel increasing the cost of semiconductors.
The three largest foundries in the world, Taiwan Semiconductor Manufacturing Co., Samsung and China-based UMC, have no presence in Europe, with most of their production in Asia and to some extent in the US. According to Trendforce, these giants accounted for nearly 77 percent of global foundry revenues in the third quarter of last year.
The fourth largest foundry, GlobalFoundries, has facilities in Dresden, Germany, accounting for approximately six percent of global foundry revenues.
Intel also has facilities in Ireland, which is upgrading to make 7nm chips by 2023, and is considering expanding significantly in mainland Europe. By mid-2021, the company said it hopes to invest as much as €80 billion in the project, and indicated it will seek government grants to partially fund it, as previously reported.
Conveniently, the European Chips Act could potentially free billions in funding from governments to encourage chip companies to boost their operations in the region.
“European chip needs will double in the next ten years. And so we need to radically raise the European game on development production,” said von der Leyen, adding: “World production itself will double, so this means quadrupling the current European production.”
A difference of approach
The US and China are also prioritizing semiconductors and focusing on locating supply chains. The EU, on the other hand, wants to strengthen its local infrastructure to complement a stronger globalized supply chain.
“Europe will always work to keep global markets open and connected. This is in the best interest of the world and in our own interest,” said von der Leyen.
The concentration of chip supply was not seen as an issue until geopolitics, trade wars and the pandemic emphasized the need to get additional manufacturing capabilities locally, said John Abbott, an analyst with S&P Global Market Intelligence. The register.
“It’s brought in funding from governments that have realized that this is a critical issue for them too if they can’t control supply chains,” Abbott said.
At the same time, the globalization of chip research and supply is important for areas like HPC, which is highly collaborative and difficult to disentangle, Abbott continued.
The EU-funded European Processor Initiative (EPI) completed the first phase of its efforts to create made-in-Europe chips in December. An EPI achievement was the creation of Rhea, a processor that combines Arm and RISC-V CPU cores and is designed for Europe’s first exascale computer to go live next year.
The Rhea chip is being developed by SiPearl, whose CEO Philippe Notton in an earlier interview with The register noted that he wanted to create a processor based on the open-source RISC-V instruction set specification; we note that top-end Arm cores eventually made it into the mix. The goal is to create technology in Europe and reduce the costs and bureaucracy associated with licensing corporate intellectual property, Notton said.
“Of course we need semiconductors. Now it’s a political fact,” Notton said. ®
PS: As we prepared to publish this story, Time magazine revealed that Intel plans to build $20 billion manufacturing facilities in Ohio, US.