Asma called on Europe to form a chip alliance stressing that there is no risk of chip surplus in the short term

The world's most advanced chip equipment supplier, Asma, warned on Wednesday that if urgent action is not taken to revitalize the semiconductor industry, Europe may fall to the point of having no influence in the global semiconductor field.

Ceo Peter Wennink also believes that there is no risk of oversupply in the global chip industry in the short term.

There is currently no risk of chip surplus

At a time when the global "lack of core" continues to plague many industries, the development of the semiconductor industry has become the consensus of many countries and regions around the world.

On Wednesday, local time, Peter Wennink predicted in a letter to investors that capital expenditures in the chip industry in China, the European Union, Japan, South Korea and the United States are expected to double from $150 billion in 2021 this year.

"We realise that this raises concerns about a potential oversupply," he said. However, we believe that the clear growth prospects of the semiconductor industry do require significant capacity increases. ”

He also said he believes the chip industry will try to avoid oversupply: "Industry partners will make enough efforts to maintain a barrier-free, efficient innovation ecosystem." ”

Asma called on Europe to improve the entire chip industry chain

As a Dutch company, Asma is particularly concerned about the development of the Semiconductor Industry in Europe. In particular, they pointed out that europe needs to improve the entire chip industry chain from top to bottom, including from chip components and electronic products. Asma also called for a broad cross-industry alliance in Europe and a brainstorming "long-term semiconductor innovation roadmap" as soon as possible.

"Without action, European semiconductor capacity (as a global share) will fall below 4 percent, which will make it almost insignificant globally," the company warned. ”

Asma's warning comes after the European Commission just submitted the Chip Bill on Tuesday. The bill proposes a series of measures to spur the development of the semiconductor industry, including a sharp increase in government subsidies to attract overseas semiconductor companies such as Intel to set up semiconductor factories in Europe, aiming to quadruple Europe's semiconductor production capacity and increase its share of global output from less than 10% today to 20% by 2030.

A senior official at the European Commission said on Tuesday: "The important thing about the Chip Act is that we send a clear signal that Europe is open to business ... We've come up with our conditions and now there's clear legal certainty about how we're going to treat their projects. ”

The European chip industry has lagged behind significantly

However, Asmail believes that the bill is far from enough to boost the European chip industry. For Europe, both the upstream production capacity of the chip industry and the downstream demand of the chip industry are currently far behind the United States and Asia.

For example, with the exception of a very few companies such as Bosch, not many companies in Europe can create enough edge computing demand. However, it is widely expected that by 2030, the growth in global demand for the chip industry will be driven mainly by the growth of data processing needs at the edge, such as self-driving cars. The European Commission predicts that the relative proportion of demand generated by edge computing and cloud computing will reverse by the end of this century, from the current 20:80 to 80:20.

According to Asma, Bosch is currently the largest company in Europe that purchases semiconductors, and it is also the company that is relatively advanced in the field of edge computing in Europe, followed by auto parts supplier Continental, which is far ahead of more traditional technology companies such as Ericsson.

Asma also said that over the past 20 years, European chipmakers have all but stopped investing in advanced manufacturing capabilities and instead outsourced production of more advanced chip designs to foreign factories such as TSMC. This means that Europe clearly lacks expertise and needs to build a new manufacturing ecosystem almost from scratch.

Stimulus needs to be greatly increased and coalitions need to be formed

In terms of fiscal stimulus, the EU currently needs $66 billion in capital expenditure to maintain its current share of global capacity of 8 percent, while Asmail estimates that the EU will need to significantly increase capital spending to $264 billion to achieve its goal of quadrupling output.

Asmad warned: "Therefore, (governments) need to strongly encourage foreign investment in advanced fabs in Europe to reduce the associated high risks... If European policymakers don't provide enough incentives, these advanced wafers will be built elsewhere. ”

Asmail also believes that if the EU is to achieve this ambition, the only way to do so is for all stakeholders to work together to develop a long-term strategy. This alliance will require experts from chipmakers, suppliers, research institutions and the wider manufacturing industry, as well as senior decision makers.

It suggested that the member states participating in the alliance should be broad and that any chipmaker willing to invest and establish a business in Europe should be allowed to join, regardless of where their headquarters are.