Opinion: Strategy, tactics of European chipmaking are being confused
Altmaier has been reported saying Germany is ready to contribute to an Important Project of Common European Interest (IPCEI) that could have a budget of €50 billion (see Germany ready to help Europe invest ‘billions’ in chip manufacturing).
That sounds highly significant, strategic even. At the same time the same reports say European chipmakers have until early March, or March 1, to submit their plans and bids for subsidy. That’s so urgent a deadline it is not even tactical. It is ludicrous.
A Volkswagen board member has been quoted by Reuters saying Volkswagen would like to deal with strong European chipmakers that are at least on par with those in Asia and the US. The unnamed board member added that European companies should be leaders in software and chips and also offered up the idea that an IPCEI could be a vehicle for subsidy.
Altmaier appears to have had his mind focused by the approach he had to make to his opposite number in Taiwan recently, asking for help getting foundries to make more automotive chips (see Germany asks TSMC to prioritize automotive chips). It would seem that lobbying by Volkswagen, Daimler, BMW and others had motivated him.
But we have to remember that because of the amount of time it takes to install chipmaking equipment and ramp up production, neither short-term nor long-term subsidies will make any difference to the problems that will be faced by Volkswagen and other car makers in the 1H21.
There are two types of subsidy that must be thought about here.
One is the tactical which provides money to European chipmakers to increase their manufacturing capacity of the power, RF and mixed-signal chips that they already make. It should be no surprise that the likes of Infineon, Globalfoundries and STMicroelectronics will be eager to be given cash to do what they were going to do anyway — and would otherwise have had to get shareholders to fund.
This money can be mobilized and spent quickly and could make a difference in 2022 and 2023. But it won’t necessarily help Volkswagen obtain an advanced engine control unit or autonomous driving processor capable of machine learning. These are the advanced digital logic chips that are made by the likes of TSMC for the likes of NXP, Mobileye, Infineon and others.
Next: The strategic kind
Europe’s ability to make and supply leading-edge digital and artificial intelligence chips can only be addressed by the second type of subsidy and more besides in terms of cultural change. That subsidy would be the one that produces a change in direction by one or more of the ‘European’ chipmakers. It requires the creation of a leading-edge wafer fab at a cost of $10 billion or more to host at least a 5nm or 3nm or manufacturing process. That is, in essence, what TSMC has been persuaded to spend to put down a wafer fab in Arizona and not been persuaded to spend in Japan (see TSMC approves $3.5 billion spending for Arizona fab and Report: TSMC, Japan to share cost of Tokyo chip facility).
Ironically it would cost far less to try an ensure Europe’s position as a leader in quantum computing chips because the manufacturing economies of scale that benefit TSMC and Samsung in ICs have yet to become manifest in quantum computing technology.
Europe has tried to hand out money before hoping it would create a world-leading European semiconductor company. The so-called ‘Airbus-of-chips’ or 10/20/100 initiative fell on deaf ears in the so-called European Leaders Group of electronics CEOs and senior executives back in 2013.
The true cost of rebuilding a presence in leading-edge chipmaking so that Europe can be strategically independent in such areas as artificial intelligence is likely to be approaching €100 billion and would require consistent effort applied across a decade or more. Which is why the idea that European companies need to get their applications in for their hand-out money by March 1 seems both confusing and ludicrous.
The strategic question is: who are the chip manufacturers that are going to take tax payers’ money to go to the bleeding-edge of IC miniaturization for the sake of Europe’s strategic independence.
So far, I don’t see anyone: not Infineon, not Intel, not Globalfoundries nor STMicroelectronics putting their hands up for that role.
Related links and articles:
Germany ready to help Europe invest ‘billions’ in chip manufacturing).
Germany asks TSMC to prioritize automotive chips
Europe will try to rebuild semiconductor capability using pandemic recovery funds
TSMC approves $3.5 billion spending for Arizona fab
Report: TSMC, Japan to share cost of Tokyo chip facility
If you enjoyed this article, you will like the following ones: don't miss them by subscribing to :
