European coalition pushes for second Chips Act funding to boost semiconductor sector

[Skye Jacobs]

Bottom line: Europe continues to lag in semiconductor production despite spending billions of euros trying to rectify this. But a new initiative signals the continent's intent to compete with leading semiconductor markets such as the United States and Asia.

A coalition of nine European Union countries, led by the Netherlands, has been formed to accelerate plans for a potential second funding package under the European Chips Act. This initiative aims to present proposals by summer, following the mixed results of the 2023 Chips Act, which, despite preventing a decline in Europe's industry, failed to meet its key objectives due to slow approval processes and less state support than that provided by the U.S. and China.

Dutch Economy Minister Dirk Beljaarts emphasized the need for a more targeted approach in the potential second funding program. "We need to allocate funds," Beljaarts told Reuters. "Both private and public funds to push the sector, also to make sure that the trickle-down effect takes place and that (small and medium-size) companies also benefit." This strategy aims to address gaps in areas such as chip packaging and advanced production, particularly after Intel shelved plans for a cutting-edge factory in Germany.

The coalition, which includes Austria, Belgium, Finland, France, Germany, Italy, Poland, Spain, and the Netherlands, is focused on three main priorities: enhancing production capabilities, mobilizing public and private investment, and fostering talent within the sector.

Europe boasts strong research and development capabilities, with companies like ASML leading the chipmaking-tools market. However, the region lags behind in advanced chip production, with only Intel utilizing cutting-edge technology in Ireland. The industry's stakeholders include major chip manufacturers like Bosch, Infineon, NXP, and STMicroelectronics, along with equipment suppliers ASML and ASM.

Following a meeting in Brussels, organizations such as ESIA and SEMI Europe are set to formally propose their needs to the European Commission's digital official, Henna Virkkunen. Their requests include direct support for semiconductor design, manufacturing, R&D, materials, and equipment.

The European Chips Act, launched in 2023, aimed to reduce Europe's dependence on foreign semiconductor supplies and bolster the region's technological sovereignty. However, it has faced challenges, including a scarcity of skilled workers and slow approval processes.

The Act has a total investment goal of €43 billion, with the Chips Joint Undertaking playing a pivotal role in bridging the gap between research and commercialization. Despite these efforts, critics argue that government intervention may not be the most effective strategy, as it can distort competition and favor inefficient producers.

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European coalition pushes for second Chips Act funding to boost semiconductor sector

 

[opckieran]

Given the nightmarish red tape and cost of energy, how exactly is the EU supposed to compete? They’re struggling to even bribe fabs to set up shop. These companies aren’t stupid.

 

[Axeia]

I don't see it happening, its the same problems why other large production industries moved from Europe.
Too many environmental regulations, so many rules to stick to. Additional filters and processes, regulations that have to be met. Great for everything besides being competitive because the rest of the world doesn't care.
Cost of electricity and water, water isn't too bad but electricity prices are amongst the highest in the world and Germany shutting down nuclear isn't helping.

The only way to appeal to the chip industry and other large scale production industry is to get rid or loosen up a lot of regulations. Basically what Trump is doing for the US now. I don't think it would much support amongst the population though.

Basically the only big upside that isn't found elsewhere is ASML being located in The Netherlands making the expertise fairly local. Everything else in the supply chain for both ASML machines and the chip making industry is located elsewhere though (due to again - regulations).

imo Europe is better off cosying up to South Korea and trying to get Samsung to focus on Europe. North Korea is mostly a lot of bluster so South Korea is probably fairly safe. Taiwan's problem (China) is too big for Europe to tackle. Intel although desperate is under Trumps control and we all know he isn't exactly friendly towards Europe (or any nation besides the US really). So that leaves trying to do it yourself, which expertise wise Europe is capable of but the production is a problem. So that leaves Samsung, a third choice in all regards really. Behind on both TSMC and Intel but perhaps with their state sponsored production and Europe's expertise it could be competitive.
A last ditch resort could always be some special coalition between South Korea/Europe and pressuring ASML into treating Samsung as a priority customer. That would be one heck of a power move though, something America if they could do themselves would surely do. But if Europe (The Netherlands really) were to do so I'm sure it'd be met with disproportionate US sanctions.

 

[pnntmp]

Europe should *drastically* reduce both regulations and bureaucracy, and completely forget any nonsense containing the word 'carbon' to have a chance to achieve something.
By drastic reduction I mean at least 80%.

They may want to hire Elon part time, because Europe is far worse than the US in regard to bureaucratic inefficiency.

 

[BuckarooBonzaii]

The EU will have to loosen some of their Regulations on tech companies. Companies listed in the article are all located in that area and if the EU wants to attract outside companies with cash then they will need to guarantee a firm contract and not make laws in the years to come that will strangle these companies.