Europe makes 9 percent of the world’s semiconductor chips. For now.
The European Union is hoping to more than double that figure by investing $48 billion in silicon chip manufacturing and similar technologies
The European Chips Act, which was formally proposed this week by the European Commission, is the latest in a series of moves to increase investment in high-tech manufacturing on the continent.
The ultimate goal: More than double Europe’s share of the semiconductor chip market to 20 percent in less than a decade — while preparing the continent to dominate emerging market categories like quantum computing.
Mark Mattingley-Scott, a former IBM executive who's now managing director of quantum computing hardware manufacturer Quantum Brilliance, tells IE that provisions in the funding proposal might enable his company to start producing its diamond-based quantum computers at least a couple of years earlier than would otherwise be possible.
In a fast-moving market like quantum computing, such a head-start could be huge.
“I think the chips act will maybe enable Quantum Brilliance to aspire to become the Fairchild or Intel of diamond[-based quantum computers],” he says.
The plan is designed to accelerate investment
Governments in Europe have already made plans to invest roughly $30 billion of public funds in high-tech manufacturing. The European Chips Act, which still has to be approved by EU member states and lawmakers, would temporarily re-write strict rules that regulate when and how individual countries are allowed to subsidize industries within their borders.
Ursula von der Leyen, president of the European Commission, said the measure “will allow — for the first time — public support for European 'first-of-a-kind' production facilities, which benefit all of Europe,” noting that money will be handed out “under strict conditions” that maintain fairness within Europe’s highly integrated economy.
Many details about the plan, including exactly what types of projects will be eligible to receive the funds, remain unclear.
Mattingley-Scott says executives at many European tech companies “are waiting with bated breath” to see what the law means “in terms of funding and funding initiatives.”
Europe relies on a global supply chain
The move comes in response to a chip shortage and supply chain crisis that has injected instability into the global economy and widespread fears that countries and regions are falling behind in an economy that’s moving quickly.
“[W]e are putting everything in place to secure the entire supply chain and avoid future shocks to our economy like we are seeing with the current supply shortage in chips,” according to Thierry Breton, another European Commission official. He hopes the move will encourage a “rebalancing [of] global supply chains” by augmenting Europe’s capacity to do everything from R&D to manufacturing.
In Asia, factories currently produce most of the silicon chips that the world’s electronic devices use to perform the head-spinning number of calculations required to run their software. Nearly all of the most advanced chips — roughly 90 percent — come from just one country, Taiwan.
There are still open questions about how Europe will fully fund the plan, though. Some $30 billion will be paid for with public funding, and another $12 billion from private investment. The big question, though, is the matter of "public funding." Where will the money come from? According to documents reviewed by Bloomberg, the answer to that question remains unclear.
European lawmakers are far from the only leaders who are concerned about the current chip shortage, which has kept 70,000 almost-finished Ford vehicles in storage and pushed Apple to undertake the daunting task of making its own chips.
Those worries have pushed several countries to make such investments. Japan plans to spend $5 billion to boost its production of the essential component, and lawmakers in the U.S. are debating plans to fund $52 billion in subsidies.