Europe must be able to make leading-edge chips, says EU’s Breton

News | May 16, 2023

By Peter Clarke

European Commissioner Thierry Breton, has said that Europe must be able to build leading-edge chips as well as making more mature chips for its automotive and industrial needs.

Breton, the Commissioner for Internal Market of the European Union and one of the architects of the European Chips Act, made the assertion at the IMEC Technology Forum held in Antwerp.

“We are refusing any attempt of geographical segmentation where Europe would produce mature nodes, while Asia and the US would produce advanced nodes,” Reuters quoted him saying. Breton also told the ITF that being excellent in research is not enough.

The European Chips Act, is said to be worth about €42 billion and is intended to improve the resilience of supply chains and reduce Europe’s dependence on external chip suppliers. It has also been touted as a way to double Europe’s share of global chip manufacturing capacity to 20 percent.

Follow the money

However, it is not entirely clear where the finance will come from with the EU expecting national governments to find most of the money to use for chip manufacturing subsidies.

Also much of the stimulus already generated including planned wafer fabs from Infineon, STMicroelectronics and GlobalFoundries and a TSMC fab under consideration in Germany, are not at the leading edge (see NXP, Infineon reported to be in TSMC, Bosch wafer fab team). Rather they appear intended to meet automotive and industrial requirements behind the leading-edge and in power semiconductors.

A project that is close to the leading-edge has been announced by Intel. However, that project could founder because of funding gap (see Intel delays German fab, wants more subsidy). It also remains unclear whether Intel has the technical capability to develop manufacturing processes for the leading edge.

The European Chips Act is Europe’s equivalent to similar plans to stimulate domestic manufacturing of chips in the US, China, Japan and India. The existence of multiple subsidy regimes is allowing chip manufacturers to demand that up to 40 percent of their costs are met. It also means that Europe is unlikely to move the needle on its share of global chip manufacturing.

It is notable that Japan has taken a two-pronged approach to stimulating domestic semiconductor production. It has helped inward investment by foundry TSMC in volume manufacturing (see TSMC mulls second Japanese wafer fab). At the same time the government is prepared to invest tens of billions of dollars in a startup company to enter the market as a 2nm foundry later this decade (see Rapidus secures US$2.3 billion to start 2nm wafer fab).