EU weighs deal with TSMC, Samsung for microchip foundry

Once a hub of semiconductor factories, Europe has dramatically cut back on manufacturing over the past 20 years, with automotive-chip designers including NXP Semiconductors and Infineon Technologies preferring to outsource a major chunk of production to giants like TSMC, and other foundries. When automakers wanted to increase orders at the end of 2020, they struggled to secure capacity, after demand had already been allocated to other industries such as smartphones.

The EU outlined a goal last year to produce at least one-fifth of the world’s chips and microprocessors by value, without giving details on how this would be achieved. “Without an autonomous European capacity on microelectronics, there will be no European digital sovereignty,” Breton said in a speech, adding that Europe currently accounts for less than 10 percent of global production of processors and other microelectronics.

To reach those goals, the European Commission, the bloc’s executive body, said it would launch a European alliance on microelectronics, which will likely include Europe’s major chipmakers and possibly also automakers and telecom companies. Technical work is ongoing to map out a plan for the alliance, but initial discussions about the fabrication plans have already taken place, according to people familiar with the matter. The alliance is due to be formally unveiled at the end of the first quarter of the year.

Related News  Auto retail veteran McLarty leads new SPAC

Europe’s plans to reinvest in leading-edge chip fabrication may be too little, too late as China, Japan and the U.S. all try to increase or regain their self-sufficiency in semiconductors. But all are slipping further behind industry leaders Samsung and especially TSMC, which announced capital spending of as much as $28 billion for this year.

The industry has also spent decades crafting a well-oiled global supply chain that would be difficult to change overnight, according to Peter Wennink, chief executive officer of ASML Holding of the Netherlands, which has an effective monopoly on the machines needed to fabricate the best chips. Regions will have to rebuild a local ecosystem, which in turn would likely raise costs.

“If you think that you can actually replicate that within a very short term, it’s simply not possible,” Wennink said at ASML’s full-year earnings press conference in January. “If governments are determined to do this, it will take years to break this up, and not months.”

In Europe, some semiconductor companies have questioned the EU’s plans to make 2 nm chips, which aim to challenge industry leaders Samsung and TSMC. The Asian companies, whose current leading-edge chips are 5 nm, both have plans to go down to the even more advanced 3nm.

Related News  The Best of All Worlds

Automakers traditionally use relatively basic chips, but as cars made by Tesla Inc. and VW have become increasingly reliant on software, the demand for smaller semiconductors has increased. GlobalFoundries is Europe’s main foundry, which typically produces 28 nm processors at its Dresden factory for mainstream applications.

“In terms of geo-strategy and from a resilience perspective in the international system, it would make a lot of sense to have an advanced foundry” in Europe, said Mathieu Duchatel, who heads the Asia program at the Institut Montaigne, adding that while there may currently not yet be a need for 5 nm chips in Europe, decades in the future it could be of use, particularly in defense innovation.

One of the biggest hurdles for the EU’s semiconductor plans could come down to financing. At a conference last week, French Finance Minister Bruno LeMaire said Europe’s industrial projects, including semiconductors, are all very investment intensive. “One of the weak points is the access to risk capital in Europe and the implementation of the capital market in Europe,” he said.

Breton said last year the chip alliance would be armed with an initial combined public and private investment of up to 30 billion euros, only slightly higher than TSMC’s annual capital expenditure this year. Around 19 member states have already backed the commission’s plans and have agreed to establish an investment instrument co-financed by the countries and participating companies. At least 20 percent of the EU’s 672.5 billion-euro recovery fund has also been allocated for digital priorities, including microelectronics

Related News  Legendary Racers Head To Auction

For more updates check below links and stay updated with News AKMI.
Life and Style || Lifetime Fitness || Automotive News || Tech News || Giant Bikes || Cool Cars || Food and Drinks


Show More

Related Articles

Back to top button

usa news wall today prime news newso time news post wall