Editor's Note:
In 2021, the semiconductor industry is still moving forward in challenges. Factors such as the post-epidemic era, production capacity tension, and geopolitics still profoundly affect the global semiconductor industry chain and ecology. How will the global semiconductor industry develop in 2022? Where will new challenges come from? In order to clarify these problems, Jiwei Network specially launched the [2021-2022 Special Topic], focusing on hot topics, hot technologies and applications, major events and other multi-dimensional combing, providing reference mirrors for upstream and downstream enterprises.
The global "core famine" lasts from 2020 to 2021, the impact continues to spread, and countries around the world have encouraged local chip manufacturers to set up factories in their own countries through subsidies and other means, or vigorously attracted foreign investment in their countries. Under the tide of subsidies, Europe, which once occupied an important position in the world's semiconductor map, is not far behind, in addition to the subsidy plan, the EU has also proposed its own chip bill.
European Commission President von der Leyen's vision for the EU Chip Act is threefold: a European semiconductor research strategy, a concerted course of action to increase European semiconductor production capacity, and an international cooperation framework. However, from the perspective of operability, these three goals are facing no small challenges if they want to achieve them.
Europe's semiconductor research strategy
European semiconductors have a long history of development, but in recent years the development has slowed down, occupying about 10% of the global semiconductor market share in 2020, and well-known manufacturers include Infineon, NXP, STMicroelectronics and so on.
Compared with American and Chinese companies, the style of European manufacturers can be summarized as "robust". As a veteran IDM manufacturer, Infineon, NXP, STMicroelectronics, etc., although they have performed well in their own market segments, have been suppressed by competitors in the United States, Japan, South Korea, Taiwan and other places from the perspective of global markets.
In this regard, European politicians and industrial circles have also given corresponding solutions, but there has been a "line dispute". As Jan-Peter Kleinhans, director of the Technology and Geopolitics department at Stiftung Neue Verantwortung (SNV), a German think tank and an adviser to the German Foreign Office and NATO parliament, points out, some argue that Europe needs to catch up with advanced manufacturing processes for processors, AI chips and graphics cards, and strive to build advanced semiconductor foundries in Europe.
But there are also some who believe that doing so is a game that must be lost, and that Europe will never be able to catch up with TSMC or Samsung, so instead of wasting money on this, we should focus on Europe's existing advantages. In terms of volume, these markets are much smaller than AI chips and general-purpose processors and even memory chips, but they are also crucial for industries such as automobiles. For example, microcontrollers for automobiles, power electronics, and RF equipment required for mobile phones and base stations, European companies are very powerful in these areas. But these are franchise markets.
These two routes will result in different results. If Europe simply wants to consolidate its own monopoly market to ensure that the existing competitive potential of the semiconductor market in Europe reaches its peak, then the future development path may be to concentrate on supporting local semiconductor companies to take them to the next level. If it is to return part of the value chain to Europe to obtain some independent production capacity, then it is necessary to copy some foreign existing frameworks, such as inviting TSMC or Samsung to build factories in Europe to diversify the value chain. The problem is that Europe is not yet clear about which side it should focus on. Compared with the strong technical foundation of the United States and China's vast market, Europe's advantages are not obvious. For the "route dispute" of the semiconductor strategy, at least in the EU chip bill that has not yet been determined. Hesitation and delay will undoubtedly make the European semiconductor industry miss the opportunity for development.
Image source: Network
Increase semiconductor production capacity in Europe
Whichever path Europe chooses, increasing production capacity is critical, and expanding production requires money. As early as December 2020, 17 EU countries signed the Joint Statement on European Processor and Semiconductor Technology Plans, announcing that they would invest 145 billion euros in semiconductor research over the next two to three years. In November 2021, the European Union announced that it may encourage countries to provide financial support for their own semiconductor industries. Obviously, the EU has realized the importance of promoting the position of the semiconductor industry in Europe, but EU member states are more concerned about how cash grants and interest-free loans are distributed. Take the "Joint Statement on European Processor and Semiconductor Technology Plans" as an example, under this statement, the allocation of funds tends to favor large countries, while countries with small national bases and relatively small markets suffer losses in capital allocation.
From this point of view, the demands of European countries are different, it is difficult to reconcile, and the semiconductor program led by major countries such as Germany and France is difficult to satisfy all EU member states.
Flag of the European Union
Coherent programme of action and framework for international cooperation
Like the United States, Japan, India, etc., Europe also hopes to introduce the world's advanced semiconductor manufacturers, such as TSMC. However, these visions also face practical problems if they want to land. Jan-Peter Kleinhans said some sectors rely on large enterprises and the necessary market centralization to guarantee efficiency in economies of scale, such as the chip manufacturing market. In these areas, whether it's a foundry or an IDM fab, if the company is geographically segmented, then to some extent, this creates some efficiency reductions. Because in general, these companies can produce chips most efficiently and economically in their own country or region, because there are their R&D systems there, there are supply networks, and re-establishing these in a new place naturally becomes inefficient. On the other hand, the European semiconductor industry itself is also affected by local manpower costs, legal circumvention and commercial mandatory compliance, and there is a trend of external transfer. "My own family" can't help but go outward, and it may be even more difficult to introduce "foreign aid."
In addition, Europe's desire to form a coherent framework of action on semiconductors also faces the constraints of different interests among countries. Countries with advanced technologies such as France and Germany naturally hope to develop their own chip industries to compete with the United States and China, but for other countries that do not have strong technical strength, it is better to directly purchase foreign technology or equipment than to develop their own semiconductor industries. Typical of this type of country is Ireland, and because of Intel's close partnership with Ireland, it is obviously inappropriate for Ireland to shift its focus to Europe's chip program at this time.
Intel
epilogue
In summary, the biggest problem facing the EU chip bill is that countries are not at the same level. The EU is not a unified sovereign state, and in recent years, with the rise of populism and protectionism, the centrifugal force of the EU has begun to be greater than the centripetal force. Whether it is to introduce foreign investment or support their own semiconductor industry, EU countries have their own choices from their own point of view, but a single EU country does not have the strength to compete with the United States, China or Japan and South Korea, so it has to look like a "group". This tangled and screwed posture also dooms the EU's chip bill, although it looks good, but it faces no small challenges to really achieve, and most of these challenges are rooted in the structural contradictions of EU countries, which are difficult to easily resolve. The ultimate symbolism of the EU Chip Act is likely to outweigh its actual effects. (Proofreading/Hidden Drei)