Amid semiconductor trade war, Europe is seeking "strategic autonomy"

nanoguy

Posts: 717   +12
Staff member
The big picture: Europe currently accounts for just ten percent of the global semiconductor industry, but the European Commission is looking to double that over the next decade. This will involve billions in funding for R&D, as well as the construction of local foundries, both of which are crucial components in the EU's plan to reshore production of electronics.

Earlier this month, the European Union was considering the idea of building a semiconductor foundry in the region in an attempt to bring chip production closer to local tech companies. Details about the project are scarce, but we do know the EU is aiming to produce chips on advanced process nodes, from 7 nm down to 3 nm and 2 nm.

The main reason is simple enough -- China and the US are stuck in a perpetual trade war and that is seen as a great opportunity to invest in what has traditionally been a weak point for Europe. The region is heralded for its plane and auto industries, but at the same time accounts for just ten percent of the world's semiconductor industry, which is valued at $533 billion. For reference, the US holds about 47 percent, while China, Japan, Taiwan, and South Korea account for a combined 40 percent.

In 2020, lockdowns had a big impact on the tech supply chain, and this in turn affected US tech giants that were dependent on chips and other components made in Asia for their products.

Coupled with an unprecedented demand for consumer electronics, this created a ripple effect that is now forcing automakers to scale back production just as car sales were starting to recover. The Biden administration is trying to address the problem, but ultimately this has sent a strong signal to the European Commission that technological self-sufficiency is now more important than ever.

After all, Dutch manufacturer ASML makes 62 percent of the advanced lithography equipment that is used by all chipmakers in the world...

China knows this, and has been trying to spearhead the development of its local semiconductor industry to ensure that it will not have to rely on others for building and maintaining its public infrastructure, or for consumer electronics. European governments have also been pushing initiatives to build more local R&D and production capacity, and the latest hinges on €145 billion ($175 billion) from the bloc's Recovery and Resilience Funds.

However, for Europe to succeed in becoming a true force in the semiconductor industry, it will need to execute the first step as soon as possible. After all, Dutch manufacturer ASML holds what is essentially a monopoly on one of the critical links in the supply chain -- it makes 62 percent of the advanced lithography equipment that is used by all chipmakers in the world. Launching a European alliance on semiconductor manufacturing would also help, since there is no clear consensus between the industry and policymakers as to what's actually possible to achieve in the next ten or twenty years.

Permalink to story.

 

Uncle Al

Posts: 8,001   +6,775
It's just an impression and I could be totally wrong but more and more each country "appears" to being headed back towards self-reliance on many priority goods and services .... as thought the "World Economy" just isn't stacked up to be what was promised. Time will tell but unless there is a reversal it just looks that way to me .....
 

GeforcerFX

Posts: 1,006   +473
I would love similar investment to happen here in the states, we have almost no advanced node production happening in country atm and that needs to change to keep our production edge and reduce reliance on such an important part of any modern economy and military on foreign companies and production.
 

candle_86

Posts: 729   +727
It's just an impression and I could be totally wrong but more and more each country "appears" to being headed back towards self-reliance on many priority goods and services .... as thought the "World Economy" just isn't stacked up to be what was promised. Time will tell but unless there is a reversal it just looks that way to me .....

Good, globalisation is the enemy of liberty
 

RedGuard

Posts: 92   +67
Good luck to Europe to bring talent. One speaks Hungarian, another one speaks Italian, one Polish and the manager German.

Cause nobody had time for English.
 

Kosmoz

Posts: 126   +202
Good luck to Europe to bring talent. One speaks Hungarian, another one speaks Italian, one Polish and the manager German.

Cause nobody had time for English.
This is not the 1980s.... it's 2021, which means most if not all (as in 90%+ at least) of the "talented" people that you refer to, also speak English.

Language is a non-issue especially at high levels... of everything.
 

mbrowne5061

Posts: 1,791   +1,030
It's just an impression and I could be totally wrong but more and more each country "appears" to being headed back towards self-reliance on many priority goods and services .... as thought the "World Economy" just isn't stacked up to be what was promised. Time will tell but unless there is a reversal it just looks that way to me .....
Building your own domestic source isn't really 'heading backwards', imo. It is just more competition. So long as trade can still move freely, globalization will continue - expect with fewer regional monopolies. Just think of it like the auto industry. The US, Asia, and Europe all have their own cars, all are competitive in their own regards, all are bought and sold around the worlds (for the most part - China is still figuring out how to appeal to western markets). I don't think anyone would argue that the auto industry as a whole is anything but a globalization success story. But cars are also much older than semiconductors and even pre-date globalization. Give the chips some time to catch up across the world.
 

BadThad

Posts: 396   +367
Up next, EU fines Microsoft, Intel, AMD, etc. (name your USA company) for fake, trumped-up garbage so they have the funds to push this project. The EU are nothing short of thieves, professionals at extorting billions of dollars from non-EU companies.
 

Avro Arrow

Posts: 1,016   +1,149
TechSpot Elite
Having more semiconductor production capacity is never a bad thing so I personally wish them all the success in the world.

I am puzzled by one thing though. GlobalFoundries is already present in Germany. I wonder what impact that will have.
 

TempleOrion

Posts: 65   +40
Up next, EU fines Microsoft, Intel, AMD, etc. (name your USA company) for fake, trumped-up garbage so they have the funds to push this project. The EU are nothing short of thieves, professionals at extorting billions of dollars from non-EU companies.

Yeah sure, gotta keep that delusion of Merkin exceptionalism alive, despite all evidence to the contrary ROFLMAO... The US was built on other people's talent and innovations, as well as their blood, sweat and slavery. It has no sense of humility or awareness of its own hypocrisy; would be funny if it wasn't so sad.

Good for the EU. Time to crack down on FB, Google and Amazon too; most tax evading monopolists tend to be Merkin since it's encouraged by Washington in order to gain worldwide hegemony at the least cost.
 

Underdog

Posts: 188   +108
It's just an impression and I could be totally wrong but more and more each country "appears" to being headed back towards self-reliance on many priority goods and services .... as thought the "World Economy" just isn't stacked up to be what was promised. Time will tell but unless there is a reversal it just looks that way to me .....
Let's hope it is the beginning of a trend. It will tend to weaken the stranglehold of a few major powers over the smaller countries. It needs to go further than just the cutting edge of technology, but pharmaceuticals, energy, and agriculture as well. The spread of patented GM seeds is seriously menacing to food producers everywhere.
 

131dbl

Posts: 28   +4
It's just an impression and I could be totally wrong but more and more each country "appears" to being headed back towards self-reliance on many priority goods and services .... as thought the "World Economy" just isn't stacked up to be what was promised. Time will tell but unless there is a reversal it just looks that way to me .....

Just think how many failing, and very expensive, businesses there would be if every country tried to go this route.

China mines most of the world's silica, and Russia mines the next. Without that, you can't do anything, along with a few other precious metals, most of which come from China, Russia, Africa and the US.

China needs the most silica because they make solar panels for the world. The bottom line is China has the ability to control the semiconductor market unless more large deposits are found elsewhere. The US has already used up most of the easily mined silica they have which is why price was starting to shoot up in 2000 - 2008, and then Chinese mined silica hit the market and the price dropped 90%

And if you're going to say silica is common, you'd be correct, but without it being in a large deposit somewhere, it's incredibly expensive to take huge scoops of earth and separate out the silica to produce silicon to produce wafers.
 

131dbl

Posts: 28   +4
The issue is going to come down to who have the raw materials and the agreements you can make with countries to get hold of those materials. The US has used most of its larger deposits of silica in all the production they've had going back to the 70s.

Right now most of the larger deposits of it that are known, are mostly in China and Russia.

While others have commented about self independence, you can't do ANYTHING without the raw materials. China is mining about 90% of the world's silica right now, and most the rest comes from Russia.

If the EU wants to start making semiconductors to supposedly be independent, that's pretty laughable unless they can find large deposits in Europe of silica.

And while this is a common mineral, that doesn't mean it's abundant enough in any one location to where it's economically feasible to remove it from the earth. You need deposits of it, not, we'll go to the beach and scoop of huge scoops of sand, have machines that can separate out the silica right THERE, put the sand back, and then get another huge scoop and repeat process. THAT doesn't work in any economically feasible way.
 

JohnSmithESP

Posts: 35   +17
It's just an impression and I could be totally wrong but more and more each country "appears" to being headed back towards self-reliance on many priority goods and services .... as thought the "World Economy" just isn't stacked up to be what was promised. Time will tell but unless there is a reversal it just looks that way to me .....
I guess is a bit like companies, when you are starting is easier and cheaper to outsource it, but when you are big enough you just make it
See apple and silicon, but a better example would be Linus Media Group buying machinery for their projects
So it may be something like that it helps developing as everyone develops different parts, but once everything is "developed" yo can put all the effort in building or making?
 

131dbl

Posts: 28   +4
I guess is a bit like companies, when you are starting is easier and cheaper to outsource it, but when you are big enough you just make it
See apple and silicon, but a better example would be Linus Media Group buying machinery for their projects
So it may be something like that it helps developing as everyone develops different parts, but once everything is "developed" yo can put all the effort in building or making?

It could work like that, if you're the company in the country where all the raw materials are coming from. But, China is the country where most of the world's silica is coming from right now, and most the rest comes from Russia. China is developing their OWN semi-conductor businesses, and I know for a FACT they'll get to where they have a high quality process node before the EU will. Right now the best wafers are coming from Taiwan and S. Korea. Intel can't even keep up with them and they get engineers from around the world. So, by the time the EU has developed the capability to produce high quality wafers, TSMC, Samsung and even Intel will be producing higher quality wafers, and China probably will be too, and China is going to want their silica going to their companies first.

So, unless the EU can strike gold, or in this case large deposits of silica, because you can't just scoop it up on the beach, I see them wasting a few billion dollars.

The same has happened with green energy. Different companies have tried to produce high quality material for solar panels, and also different companies (and a couple still are) making high quality wind turbines. China now has the market cornered for solar panels (because most the world's silica is coming from China), because of their access to raw materials, along with govt. assisted research into improving the efficiency of the panels and improving the manufacturing processes, and no one can tough them now. They're about on that level with wind turbines, but their manufacturing process isn't as good as Germany's, so the best wind turbines are coming from Siemens, the next is Dutch and then GE. There's a couple more manufacturers in Germany after that, but China is catching up.

It's very hard to compete against Chinese companies because they get govt. subsidies and the EU and the U.S. and other countries don't work together to fight against their economic model and kick them out of the WTO. Instead, the EU just finalized a new trade agreement with China. That will work fine for about one decade, while China is slowly killing the rest of the EU companies.

So, unlike the comment you replied to which suggests the EU is bring industry home, with a new trade agreement with China, who is the killer of most companies around the world, or at least manufacturers, the EU really isn't making a big effort to bring back a lot of manufacturing, and this effort for breaking into the semi-conductor industry when they'll be reliant on China for raw materials unless they can discover it themselves, and China is ALSO developing THEIR semi-conductor industry, all I have to say is good luck with THAT one.
 

BadThad

Posts: 396   +367
Yeah sure, gotta keep that delusion of Merkin exceptionalism alive, despite all evidence to the contrary ROFLMAO... The US was built on other people's talent and innovations, as well as their blood, sweat and slavery. It has no sense of humility or awareness of its own hypocrisy; would be funny if it wasn't so sad.

Good for the EU. Time to crack down on FB, Google and Amazon too; most tax evading monopolists tend to be Merkin since it's encouraged by Washington in order to gain worldwide hegemony at the least cost.

Hate the USA, huh? We are #1 in the world pal due to our creativity, freedom and talent. You are SAD! Put that in your anti-America, hate pipe and smoke it.
 

Markoni35

Posts: 980   +395
Not really. France is #2 behind China for IP theft from America (and probably just in general).

That's only because in the US you can patent any kind of trivial crap.
Patent #56728342: "Hereby we are protecting any program written in C, C++, C#, Java or JavaScript that has at least one open and one closed curly brace."

"There, now everyone who wrote even the stupidest Hello World program is stealing our IP".
 

mbrowne5061

Posts: 1,791   +1,030
That's only because in the US you can patent any kind of trivial crap.
Patent #56728342: "Hereby we are protecting any program written in C, C++, C#, Java or JavaScript that has at least one open and one closed curly brace."

"There, now everyone who wrote even the stupidest Hello World program is stealing our IP".
The point wasn't 'why'. The claim was "Europe buys", which is demonstratively false. Everyone steals from each other.