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EU’s costly plan to close the semiconductor gap

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NS Semiconductor shortage EU domestic market commissioner Thierry Breton continued to force automakers to cut production last week International partnership For Block’s planned “European Chip Law”.Formally Announced last month According to European Commission President Ursula von der Leyen, this aims to speed up the EU with other major microchip producers. The plan is motivated, but partially flawed.

Supply chain turmoil is drawing attention to microchips as the center of the digital economy. It is essential for artificial intelligence, quantum computing, and the “Internet of Things.” Access to the most sophisticated chips is important not only for industry but also for military security. However, most production is in the hands of China, Taiwan, South Korea, and the United States.

Everyone is investing heavily to strengthen their position. The bipartisan Chips for America Act envisions billions of dollars in microchip manufacturing and research. China, hampered by export restrictions that hinder US technology transfer, is spending more to catch up. Von der Leyen is formulating an EU plan on the issue of “competitiveness and technical sovereignty”.

Semiconductors are the kind of field where coordinated EU action can bring results. However, doubling the EU’s share of global semiconductor manufacturing to 20% by 2030, which is one of the key goals, is risky. Expensive.. Today’s top producers enjoy decades of lucrative start and countless billions of dollars in investment. There are also large manufacturing departments, such as household appliances, offering a market for the output of plants that produce “megafabs” or large quantities of advanced chips.

The business case of investing huge investments, including public funds, to establish a substantial EU position in all parts of the semiconductor value chain has not been proven.Not sure if EU chip factoryWith higher labor costs and lower subsidies, you can compete with lower cost Asian producers.

For the EU, there is a more compelling example of concentrating public and private investment to build parts of an already successful supply chain, such as R & D and specialized manufacturing. We should strive to harness our scientific capabilities in high-value areas, especially by rekindling the chip design industry. Europe does not have a major “fabless” technology company that designs and outsources chips, but it does have strong research facilities such as Belgium’s Interuniversity Microelectronics Center, a leader in semiconductor research involving 2 nanometer chips.

Block also needs to strengthen its interdependence with other partners, especially the United States. You can take advantage of your position as a supplier of other important inputs such as machinery and chemicals for chip manufacturing. For example, ASML in the Netherlands supplies chip makers with advanced lithography machines. The EU can offer its machines, inputs and designs in return for guaranteeing access to microchip production.

The EU’s semiconductor initiative has received the most attention, but the parallel alliance launched in July — Edge computing and cloud computing — Less important and probably a better case for activist policy. It aims to bring together businesses, academics and the research community to accelerate the development of next-generation cloud infrastructure for the public and private sectors. Success here will be more decisive in ensuring the competitiveness of Europe in the future, rather than being able to make its own chips.

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