The coronavirus causes a global chip deficit; the US has already joined, now the EU also wants to secure itself for the future.
The European Commission announced on Wednesday that it has begun work on a draft to set up a chip production system within the European Union. The plan was launched by the Commission after a shortage of chips due to the coronavirus resulted in a temporary suspension of production or a reduction in the production rate of many European groups.
A fundamental problem is that the largest chip makers, without exception, are Asians: Hong Kong, China, Taiwan, South Korea, Singapore, Malaysia are in the top six, and Japan, Vietnam and the Philippines are in the top ten outside the US. even into it. The EU’s capacity is very limited, so any disruption in the global supply chain could lead to catastrophic effects.
According to Ursula von der Leyen, President of the European Commission, the aim of the draft is therefore to create an ecosystem within the EU that will be suitable for the design and production of high-tech solutions.
Given that digitization is no longer an extra but a basic requirement, it is unthinkable to produce a plethora of products without chip manufacturing and related software developments.
It’s enough to just think about car manufacturing; there are plenty of systems in a modern vehicle, all of which require some sort of control unit. The importance of chip manufacturing is well illustrated by the fact that the US is wearing similar shoes (where the CHIPS for America Act plan was adopted last year); but on a smaller scale, we can also mention the example of Apple or Huawei.
Both manufacturers have switched to proprietary processors, among other things, to reduce their dependence on other manufacturers. The importance of digital tools is further illustrated by the fact that the European Commission is allocating one fifth of the 750 billion envelope of the COVID-17 Recovery Fund to projects related to this area.
European chip production will initially serve the needs of the internal market, but in the medium term it would compete with Asia and the US. The EU currently owns 10 percent of global chip production capacity, and by 2030 I want to do so significantly, 20 percent higher. A big help in this may be that Intel, according to a recent ten-day announcement, wants to increase its European manufacturing capacity with an investment of $ 80 billion over the next ten years.
The Chip Act can be drafted with the involvement of EU Member States and will divide the sub-tasks of chip production (R&D, manufacturing, international coordination) between Member States. In order to achieve the fastest possible outcome, it is possible that the EU will also review the system of coupled support, leaving room for EU-level and / or national support.
For the efficient distribution of EU funding, a European Semiconductor Fund could also be set up, which will play a role in the efficient distribution of EU funds.
While the EU’s plans undoubtedly serve an important purpose, it must not be forgotten that it is not enough to have a plan and a production line for production: raw materials are also needed. And there is a serious problem with that.
The rare earth metals required for chip production are mostly found in Asia.
Among the 17 rare earths, 87 percent are mined by China and 8.8 percent by Japan, and a crisis like COVID-19 could cause problems in mining. China, for example, reduced its exports by 20 percent during the pandemic, which of course also had a big impact on the industry’s productivity.
In light of all this, it will be a challenging innovation, we will see where it leads.
Source: PC World Online Hírek by pcworld.hu.
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