Europe needs to wake from its 30-year semiconductor sleep: Page 3 of 3

February 21, 2021 //By Peter Clarke
Time for Europe to wake from a 30-year slumber
Peter Clarke looks back over three decades that have led the EU let multiple electronics systems industries wither and left Europe dependent on offshore chipmakers who do not always deliver.

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.

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