European and American chip competition has escalated, and tens of billions of public funds have been invested in response

After experiencing a serious global chip shortage crisis in 2021, Europe and the United States have ushered in an important moment to change the competitive landscape. For the first time in THE HISTORY OF THE EUROPEAN UNION, IT HAS REWRITTEN THE CHIP SUBSIDY POLICY BILL TO JOIN STATE AID.

On Tuesday, the European Commission will introduce a public funding bill with a total size of 42 billion euros. The draft bill, which still needs to be passed by member states and the European Parliament, marks that Europe, which is highly open to competition, has also had to adopt the paradigm of interventionist industrial policies under pressure from the international environment in order to reduce external dependence.

According to the plan, by 2030, the EU plans to provide 12 billion euros in subsidies for innovative chip research and development and pilot production line construction, thus preparing for future industrialization. Of this, €6 billion comes from the European Union and another 6 billion from member states.

Another 30 billion euros of public aid will be used to build large-scale chip factories and encourage innovation by small companies, including to attract investment from overseas companies in Europe, such as Intel. The EU hopes that these public funding will also trigger more private investment.

Thierry Breton, the internal market commissioner in charge of the EU's chip funding program, said at a news conference on Friday: "The EU will equip itself with the means to secure supply, as the United States has done, to deal with possible export restrictions abroad in the event of a chip crisis." ”

European Commission President Ursula von der Leyen has set a goal of doubling the EU's market share in semiconductors to 20 percent of global production by 2030 to reduce dependence on Asian supply chains. This also means a fourfold increase in the production of semiconductors produced in Europe.

Breton stressed that the EU still relies on Asia for more than half of its chip needs. "There are significant economic risks to this." Breton warned, "Once Asia restricts exports, almost all of the world's chip factories will only be able to sustain for up to three weeks." ”

During the COVID-19 pandemic, some Asian chip factories have been shut down by epidemic control measures, which has had a significant impact on the global chip supply chain and led to the interruption of the supply of some chips.

Breton noted that the upcoming policy of subsidizing public funds is a "paradigm shift" for Europe, but he still insists that Europe is a continent that remains highly open to competition.

"It is still difficult to have a big development in the European semiconductor field, because there is not enough market." Gartner analyst Sheng Linghai told the first financial reporter, "There are almost no other large high-tech electronics companies in Europe except for the demand of automobile and industrial equipment companies. ”

At the same time, the United States is also increasing government investment in the semiconductor industry. On February 4, local time, the US House of Representatives voted to pass the US Competition Act of 2022. The 3,000-page bill aims to boost massive investment in U.S. semiconductor manufacturing.

The bill includes up to $52 billion in grants and subsidies to the semiconductor industry and will invest $45 billion to strengthen supply chains for high-tech products. Industry reports estimate that these investments will enable the U.S. to build 19 factories over the next 10 years, doubling chip manufacturing capacity.

The global chip has been in short supply for the past three years, and the COVID-19 pandemic has exacerbated this trend. A report released last week by the Commerce Department said the median inventory of some semiconductor products has fallen from 40 days in 2019 to less than 5 days in 2021, and that this problem will not be resolved in the next six months.

U.S. Commerce Secretary Gina Raimondo said: "The global chip shortage has a significant impact on the economy, including the automotive industry, and too much reliance on semiconductors produced overseas also has an impact on national security and must be dealt with immediately." ”