Will Intel save Europe's struggling semiconductor industry?
- Written by Andrew Johnston, Professor of Innovation and Entrepreneurship, Coventry University
Intel’s proposed US$30 billion[1] (£23 billion) investment in semiconductor manufacturing capacity across Europe has the potential to significantly boost the continent’s struggling chip industry.
The US giant is poised to invest an initial US$17 billion to build a cutting-edge semiconductor factory (known as a fab) in Germany, along with associated R&D facilities to develop new generations of chips in France, Ireland and Poland. It is also in negotiations with the Italian government to develop a manufacturing facility in that country.
If such proposals come to fruition, the overall investment could top US$80 billion and create over 3,000 high-tech jobs and many more across the digital supply chain. Intel, the relevant national governments and the European Commission argue that these investments will transform Europe’s semiconductor supply chain and make it more competitive. The role of national governments and the European Commission is important to note as Intel’s investment is likely to be underpinned by billions of euros worth of public subsidies.
Chip production has been high on Europe’s agenda as many high-technology companies have been struggling to source chips because the COVID-19 pandemic has disrupted worldwide supplies. Europe’s automotive industry[2] has been particularly hindered as a result. Russia’s invasion of Ukraine has accentuated the problem because the industry relies on both nations[3] for neon, which is vital for the lasers used to cut state-of-the-art chips.
Intel’s investment in new capacity is not going to address these current issues, given that production is not expected to begin until 2027[4]. But it could eventually ease Europe’s dependency on sourcing chips from afar and revitalise the continent’s increasingly uncompetitive operations.
The world market
The semiconductor industry is global in scope, with nearly two-thirds[5] of chips manufactured in Asia – particularly South Korea, Taiwan, Japan and China. This dominance has come at the expense of European producers, which now account for only around 8% of the world market, compared to 44% in 1990. This is largely the result of under-investment.
Principally as a result of heightened geopolitical instability, the EU has recently become concerned about “digital sovereignty”. Its recent European Chips Act[6] set out a range of measures to boost European production by pooling different countries’ resources to complement their individual research strengths. It also supports developing new production facilities with a view to increase Europe’s share of the global market to 20% by 2030.
Chips off the old bloc.
gopixa[9]
Innovation is clearly the name of the game when it comes to competitiveness in chip-making. To give the European Commission its due, it has provided significant funding for semiconductor research over a number of years through the Framework and Horizon programmes. However, successful commercialisable innovations stemming from this research have been relatively sparse[10].
Therefore, alongside supporting large, foreign direct investment projects there must be an enhanced focus on improving the entrepreneurial and innovative capabilities and capacity across Europe’s semiconductor industry. Without this, there is a real danger that due to a lack of significant viable demand in future, we will be reading news of the mothballing of the proposed new manufacturing facilities.
References^ US$30 billion (www.intel.com)^ automotive industry (www.acea.auto)^ relies on both nations (www.euractiv.com)^ until 2027 (www.cnbc.com)^ nearly two-thirds (techwireasia.com)^ European Chips Act (ec.europa.eu)^ Boston Consulting/Semiconductor Industry Association (www.statista.com)^ recent research (csconnected.com)^ gopixa (www.shutterstock.com)^ relatively sparse (csconnected.com)Read more https://theconversation.com/will-intel-save-europes-struggling-semiconductor-industry-180517
