Trade Wars

EC president promises EU chip law to boost production

The European Commission will introduce legislation next month to turn the continent into a center of expertise and chip manufacturing.

The EC will propose the European Chip Law in early February, which will strengthen Europe’s infrastructure for the production and supply chain of chip manufacturing, Ursula von der Leyen, chair of the commission, said in a speech at the Forum. global economy on Thursday.

The aim is to increase Europe’s market share in global chip production to 20% by 2030, which would mean quadrupling current EU production, she said, and would involve state aid to build “first of its kind” production facilities.

President of the EC Ursula von der Leyen

“Today most of our supplies come from a handful of growers outside of Europe. And that’s a dependency and an uncertainty that we simply cannot afford,” von der Leyen said. “We will create more balanced interdependencies and build reliable supply chains by avoiding single points of failure.”

Today, Europe is heavily dependent on factories in Asia for its chip supplies, with transportation and fuel driving up the cost of semiconductors.

The world’s three largest foundries, Taiwan Semiconductor Manufacturing Co., Samsung and China’s UMC, have no presence in Europe, with most of their manufacturing based in Asia and to some extent in the United States. According to Trendforce, these giants accounted for nearly 77% of global foundry revenue in the third quarter of last year.

The fourth-largest foundry, GlobalFoundries, has facilities in Dresden, Germany, which account for just about 6% of the foundry’s global revenue.

Intel also has facilities in Ireland, which are being upgraded to manufacture 7nm chips by 2023, and plans to expand significantly on the European continent. In mid-2021, the company said it hoped to invest up to €80 billion in the project and indicated it would apply for government grants to partially fund it, as previously reported.

Ideally, the European Chip Act could potentially unlock billions in government funding to encourage chip companies to strengthen their operations in the region.

“Europe’s need for chips will double over the next decade. And that’s why we need to radically raise Europe’s game on development production,” von der Leyen said, adding: “Global production itself even will double, which means quadrupling today’s European production.”

A difference in approach

The United States and China are also prioritizing semiconductors and focusing on localizing supply chains. The EU, meanwhile, is looking to strengthen its local infrastructure to complement a stronger globalized supply chain.

“Europe will always strive to keep global markets open and connected. It’s in the interest of the world and it’s in our own interest,” von der Leyen said.

Concentrated chip supply was not seen as an issue until geopolitics, trade wars and the pandemic highlighted the need to secure additional manufacturing capacity locally, said John Abbott, analyst at S&P Global Market Intelligence. The register.

“It brought in funding from governments that realized it was also a big issue for them if they couldn’t control the 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) concluded the first phase of its effort to create chips made in Europe in December. One of EPI’s achievements has been the creation of Rhea, a processor that combines Arm and RISC-V processor cores and is designed for Europe’s first exascale computer due to go live next year. .

The Rhea chip is developed by SiPearl, whose CEO Philippe Notton in a previous interview with The register noted that he was considering creating a processor based on the RISC-V open source instruction set specification; we note that the high-end Arm cores have finally made their way into the mix. The aim is to bring technology to Europe and reduce the cost and bureaucracy of licensing intellectual property to companies, Notton said.

“Semiconductors, of course, we need that. Now it’s a political fact,” Notton said. ®

PS: As we were preparing to publish this story, it appeared in Time magazine that Intel was planning to build a $20 billion manufacturing facility in Ohio, USA.