“Go big” for European chip sovereignty, says Silicon Saxony
President Biden recently signed an executive order calling for a 100-day review of key supply chains, which is seen to back a $37 billion support package for US chip manufacturing.
Silicon Saxony’s exhortation came in an open letter to the German ministers and members of the Bundestag that broadly welcomed the possibility of a second Important Project of Common European Interest (IPCEI) for microelectronics. The IPCEI is a funding mechanism that supposedly bypasses national and European Union commitments to the World Trade Organization not to subsidize commercial activities.
Silicon Saxony, a network of companies and associations promoting the semiconductor industry in that part of Germany, welcomed the prospect of an IPCEI-2 saying it could be a contribution to securing German and European technological sovereignty.
The letter was sent on the deadline for expressions of interest for participation on March 1. The letter pointed out that, despite the success of the first IPCEI, production of chips in Europe continues to fall by volume. It did not comment on how Europe lags many other regions in technical capability.
The letter was clearly intended to galvanize ambition and urgency amongst the politicians to whom it was addressed. It pointed out that regions such as the United States, Japan and China are setting aside large sums to achieve technological sovereignty and reduce their dependence on the technology leaders Taiwan and South Korea.
It pointed out that the European economy has been hobbled because of chip shortages in the automotive sector and that this was a natural consequence of a lack of sovereignty. It pointed out such risks would likely become more widespread across different application sectors and more significant with the increasing digitalization of society.
Next: Don’t delay
In translation the letter said: “Without a fast and consistent implementation of IPCEI 2, there is a risk of a further loss of importance for Europe and Germany within the global value chain. The world is not waiting for Europe. In these days investment decisions have been and are being made worldwide, for example by TSMC and Samsung in the USA or TSMC in Japan.”
It added: “The federal government and the EU must provide the necessary funds to enable ambitious projects, especially in comparison to the above-mentioned Asian countries and the USA.”
The letter said that one of the biggest risks was of delay (see Europe will try to rebuild semiconductor capability using pandemic recovery funds). “Since delays are foreseeable with the large number of expressions of interest from other countries, we demand that the German partners start by July 1, 2021, at the latest, as well as a concrete implementation plan to achieve this goal.”
Silicon Saxony argued that Germany should be the coordinator of the European plan to promote R&D, innovation and “above all” manufacturing expansion. In the IPCEI the governmental funding quota is likely to represent 20 to 40 percent of the total project budget, something that Silicon Saxony welcomed.
Silicon Saxony did not address the big difference in cost and time-scale, between expanding the manufacturing capacity of Europe’s current capability and that of seeking to develop and manufacture leading-edge digital processes.
The latter would almost certainly require the support of global leaders Samsung or TSMC. Both of which are heavily engaged in the US (see Reports: Europe wants Samsung and TSMC to enter fab project). But it would also represent a conflict of interest with indigenous European chip makers such as Globalfoundries, Infineon and STMicroelectronics who are not engaged in leading-edge digital manufacturing. To the extent that they operate at the leading-edge they do so by outsourcing their designs to TSMC and Samsung and others.
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