Semiconductors are at the heart of most modern industrial products. Yet most of the world\u2019s chip production is centered in East Asia. Europe and the U.S. now want to change this and have adopted programs to strengthen their respective semiconductor industries through subsidies, tax breaks, and other incentives. But will that be enough?<\/em><\/span><\/p>
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\n Manufacturing microchips is a highly complicated and costly process, and its supply chains are no less complex. In most cases, each phase \u2013 whether that is the production of the silicon itself, the creation of wafers from it, or testing of the final product \u2013 takes place at a different location. As a result, even the slightest disruption at one of the many stages greatly impacts the rest of the production. The pandemic made it clear just how sensitive value chains are, as factory closures, overloaded ports, and supply bottlenecks took hold. \r\n\r\nAll that said, the disrupted microchip chain doesn\u2019t just affect consumer media such as games consoles and smartphones but extends to key sectors such as healthcare, transportation, energy, security, and defense. No wonder, then, that economies want to return regain control over their own fate after decades of relying on imports. Asia has historically led the charge, but now the West is making moves.<\/p>\n\n\n\n On August 9, 2022, U.S. President Joe Biden signed the CHIPS and Science Act, which is intended to strengthen the U.S. semiconductor supply chain and promote research and development of advanced technologies across the country. The government has vowed to make just short of 53 billion dollars available in handouts<\/a> to the industry over the next five years. However, if a manufacturer takes advantage of subsidies, it agrees not to expand its business and semiconductor production in China for the following ten years, with a few exceptions.<\/span><\/p>
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\n With this, the U.S. becomes more competitive in the race against the People\u2019s Republic, despite the Chinese recently launching the first seven-nanometer chips<\/a>. Until recently, it was assumed that the Chinese were about four years behind technologically. Last year, they were still producing 14-nanometer chips. Furthermore, its share of the market is growing<\/a>. In 2001, it amounted to less than one percent. It rose to more than ten percent in 2010 and is expected to account for a quarter by 2030. <\/span><\/p>
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\n In a similar move, The European Commission wants to quadruple domestic chip production by 2030, aiming for 20 percent of the global market. To achieve this, it intends to invest 45 billion euros in the development and construction of semiconductor fabrication plants. In addition, measures will be taken to identify bottlenecks in chip supply at an early stage. \r\n\r\n<\/p>\n\n\n\n With the EU Chips Act, Europe could attract foreign chip giants to produce in Europe \u2013 likely with success. The U.S. corporation Intel is planning several locations<\/a> at once \u2013 if the incentive is in place. Even Germany is on the target list with a mega fab planned in Magdeburg. Research and development centers in France, Ireland, Poland, and Spain are also in discussion. Even Taiwan\u2019s TSMC and GlobalWafers have both discussed building in Europe<\/a> if the financial support from the EU is right. After all, fabs in the West are more expensive to build than in Asia.<\/span><\/p>
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\nUS Subsidies with a Catch <\/h5>\n\n\n\n
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The EU is Fishing for Chips<\/h5>\n\n\n\n