Here are proposals and doubts on the European plan for microchips
On Tuesday 8 February the EU Commission will present the Chips Act to make the Union a major player in the microchip sector. But there are doubts about funding and the use of state aid. All the details
On Tuesday 8 February, the European Commission will present its proposal for the "European Chips Act", or the plan that should increase the weight of the European Union in the world market for microchips, critical components for a whole series of industries, from automotive to defense electronics.
THE CONTEXT, IN BRIEF
Also known as semiconductors, today microchips are mainly manufactured in Asia (Taiwan and South Korea) with technologies developed in the United States. Europe wants to catch up and install the chip design and manufacturing phases on its territory to achieve technological autonomy and protect itself from future supply crises that would put the national economy and security at risk: the current one has been going on for over a year, and it seems that it will not be resolved any time soon.
THE EUROPEAN OBJECTIVES
At the end of January, Thierry Breton, European Commissioner for the Internal Market, had anticipated that the European Union was aiming to invest billions of euros in microchips to more than double its global production share by 2030, bringing it to 20 per cent. He did not provide exact investment figures, but spoke of a level comparable to that of the US plan, the CHIPS for America Act, containing $ 52 billion.
The European strategy, Breton said, will cover a time span of twenty to thirty years and will include looser rules on state aid for the construction of state-of-the-art chip development and manufacturing plants. An advanced factory costs an average of $ 20 billion; given the technological advancement, then, these structures tend to become obsolete in a short time, within five years.
WHATEVER IT TAKES
"We will do everything to attract strategic investments," Breton said. "I want the European Union to become a net exporter of semiconductors as it is with vaccines." “Not [to do] everything by ourselves”, he specified, “but to have the capacity if necessary, so that the European Union cannot be held hostage” by foreign nations who decide to limit the exports of these components.
DOUBTS ABOUT CHIPS ACT
Brussels' ambitions are great, but times are tight (2030 is just eight years from now) and there are concerns about the funds. The funding – as recently said by the President of the Commission Ursula von der Leyen – amounts to 42 billion euros: 30 billion have already been allocated "from the public coffers", writes Bloomberg , while the remaining 12 will come from a mix of public and private money. .
The portal writes that the budgets of the member states of the Union are however "overloaded" and that – citing its anonymous sources – a "battle" is possible between national governments to obtain European money already allocated to other projects. However, the European Union budget was decided until 2027: the Commission, therefore, does not have much room for maneuver.
For this, funding for the Chips Act will come from already open lines, such as a 1.8 billion digital fund or the Horizon Europe research program. The 30 billion of public origin that von der Leyen spoke of, in particular, is an estimate based on the amount of state aid that member countries could issue. These funds will go towards small research and innovation projects, but will also serve as an encouragement for foreign giants in the sector – such as the Taiwanese TSMC or the American Intel -, pushing them to open factories in Europe.
THE QUESTION OF STATE AID
According to the draft Chips Act reviewed by Bloomberg , the Commission wants to make the rules on state aid less stringent if they are destined for advanced (i.e. very small) or particularly energy efficient microchip factories.
The current rules restrict state aid to the research or experimental production phases only. Instead, the changes are intended to attract foreign companies. In this regard, in October there was talk of how Mario Draghi's government was preparing an offer to Intel to convince it to open an advanced semiconductor production plant in Italy.
– Read also: Will Intel package the chips it will produce in Germany in Italy?
WHAT GERMANY, THE NETHERLANDS AND ITALY THINK
Last November, the now former German Chancellor Angela Merkel said that "the production of competitive chips, the size of 3 or 2 nanometers, for example, is essentially impossible without state subsidies."
– Read also: Not only Siltronic: all Germany's moves on microchips
The German idea, however, does not appeal very much to the Netherlands, historically bearers of a liberal line in economics, which think that the European Union's plan to detach itself from the global semiconductor supply chain to focus on self-sufficiency is "an illusion". “European interests”, a Dutch government document read, “are best served by an open ecosystem that remains focused on attracting investment, accelerating innovation and adding value to the market. Diversification and mutual interdependence promote resilience ”. Basically: less focus on self-sufficiency (and public subsidies), more emphasis on the open market. The Netherlands is home to major companies in the semiconductor supply chain , such as ASML (which manufactures advanced machinery), NXP and Besi.
Italy is positioned between France and the Netherlands: the Minister of Economic Development Giancarlo Giorgetti recently declared that a "reflection on the compatibility between technological sovereignty and state aid" is necessary.
The European Commission argues, in the draft Chips Act, that state aid must be "necessary, appropriate and proportionate". It is specified that Brussels will monitor their use to ensure that they do not “negatively affect trading conditions to an extent contrary to the common interest, weighing the positive effects of such state aids with their likely negative impact on trade and competition”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/unione-europea-microchip-chips-act/ on Mon, 07 Feb 2022 09:25:07 +0000.