Wafer fabs are significant engines of employment and technical development. Wafer fabs also produce the necessary hardware components for wealth creation and therefore for well-being; they are the strategic enablers of electronic systems as Volkswagen and others have recently been reminded.

The world’s most technically advanced manufacturer of integrated circuits, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), doesn’t only make ICs in Taiwan. It also makes – or will make/assemble – chips in the US and China. TSMC has said it before and has now said it again. The company has no plans to start manufacturing chips in Europe. So, what is so different about the US, China and Japan?

Would that be the presence of globally significant makers of electronic products that value the leading-edge; a strong semiconductor ecosystem; and political clout that gets exercised from time to time? The automotive supply chai has highlighted the importance of that market.

What electronics products does Europe make in volume? That would be automobiles, courtesy of Volkswagen, Daimler, BMW and Stellantis BV, the holding company for Peugot, Citroen, Fiat and Chrysler.

Automobiles are amongst the most complex artefacts produced by humans, perhaps ranking only behind aircraft and spacecraft but the high premium set on safety means they almost by definition are not users of leading-edge hardware. So lengthy are the design and approvals processes that automotive companies nearly always use chip manufacturing processes behind the leading-edge.

But automotive semiconductors still rely on the fact that those technologies were previously pioneered for use in high performance computing and smartphones. This means generations of manufacturing processes have been characterized and debugged before they are augmented to meet automotive functional requirements and operating conditions. It is not really possible in the long-term to separate the leading-edge from what has come to be known as More-than-Moore.

Perhaps, the US, China and Japan have to an extent shaped – rather than merely endured – the tide of globalization so that they still have a strategic role to play? Taiwan and South Korea have certainly shaped their own technological destinies.

Next: Fortress Europe

I, amongst many, was asked by AMD representatives back in the late 1980s and early 1990s if ‘Fortress Europe’ was real. This was the early days of the European Economic Community (EEC) and before the European Union was so named and Fortress Europe was being cartooned on the front covers of influential publications.

I told those executives that it was my opinion that the EEC wanted to reduce tariffs and lower trade barriers. AMD decided to build a fab in Dresden, Germany, anyway, just to make sure they could sell into Europe and avoid the existing but reducing tariffs. For the same reasons Intel decided to build a fab in Leixlip near Dublin, Ireland.

Back then European companies made personal computers in Europe and were in the market for x86 processors. Now there are no globally significant European computer companies.

Later those European wafer fabs – both the inwardly invested and some of the domestically owned ones – migrated to make different forms of ASICs and system-on-chip (SoC) ICs at, or close to, the leading-edge. Some of those SoCs went into mobile phones.

Back then European companies made mobile phones in Europe and were in the market for SoCs. Now, despite the resuscitation of the Nokia phone brand by HMD Global, it can be argued there are no globally significant European mobile phone companies.

What is leading-edge today and used only in smartphones will become the platform for More-than-Moore in five to ten years time. And in any case the rising deployment of on-board artificial intelligence and high bandwidth communications is pushing automotive IC needs towards the leading-edge.

Any politically wished-for improvement in Europe’s semiconductor supply chain and strategic capability in semiconductor technology must be seen in this light.

Next: I was right

It turns out that I was right. The European Union was focused on reducing tariffs and lowering barriers to trade and using the power of the single market to generate value and wealth for its citizens. For neither AMD nor Intel was there a long-term economic imperative to build fabs in Europe, although it can be argued that Intel, AMD and AMD’s successor in Dresden, Globalfoundries, have all done well from their use of well-educated, capable and diligent employees in Ireland and Germany.

For 30 years Europe has been open for business – with the emphasis on open – and it is no coincidence that there have been no major additional inward investors in wafer fabs since AMD and Intel with the exception of STMicroelectronics’ facility at Crolles near Grenoble. In 2002, the Crolles2 Alliance was formed, consisting of ST, Philips Semiconductors (now NXP) and Motorola Semiconductors (which became Freescale and then merged with NXP). TSMC was added to the group as a ‘fab-lite’ strategy gained hold. TSMC helped move the chip manufacturing out of Europe.

Since then European chip companies have pursued their fab-lite strategies and developed specialized processes for things away from the purely digital, such as power semiconductors and sensors. If Europe had been more pro-active about shaping its future it might now have more engagement with the likes of TSMC, especially with the company’s roots within Philips Semiconductor. Others may say European politicians has been sleepwalking through an on-going technology revolution.

It should also be remembered that today’s leaders of the automotive industry are coming to the end of a consolidation phase. They are the old order and a changing of the automotive guard is coming that may well see the likes of Tesla, Apple, Samsung and Chinese brands such as Geely, Byd, Great Wall and Alibaba rising to prominence.

And then what will Europe be? A great place for affluent students of history from the US, Japan, China, South Korea and Taiwan to go for a nostalgic holiday. And what will Europeans be doing? Arranging the hotel deckchairs and flipping the burgers.

Europe’s politicians have long touted that the single market of about 400 million people and worth US$40 trillion annually is its great strength. It is time for Europe to wake up and show that the single market does have some political clout in the world. The single market has to be able to do more than just keep prices down for consumers and be a source of tax revenues. It has to be able to set standards and, when necessary, attract important entities to Europe’s side.

Sleeping Beauty needs the kiss of a Prince Charming but who will it be?

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