The EU Chips Act will help Europe strengthen its position as a technological leader in some fields of the semiconductor value chain and promote economic growth in the coming decade
FREMONT CA: In the coming decade, the EU Chips Act will help to boost economic growth. Europe must reduce its reliance on imports from Asia and abroad to mitigate geopolitical threats. Future European industries should benefit from state-of-the-art chip manufacturing capabilities based in Europe with the aid of policymakers. By the end of the decade, it will be good if local semiconductor production capacity matches demand from European end markets. As a result, the economy is less vulnerable to supply chain interruptions while also fully participating in future breakthroughs in artificial intelligence (AI) and autonomous industrial systems, both of which will rely heavily on cutting-edge chip innovations. Fundamentally, every sector using AI systems requires advanced semiconductors.
State-of-the-art semiconductors are also required to carry out the EU's environmental objective. The electrification of the economy necessitates the usage of semiconductors on a more frequent basis, while any new generation of chips will consume less energy. Additional investments in research and design will strengthen the existing European chip ecosystem (R&D). It will also benefit from its size, with greater local output and better resource availability. Semiconductors are extremely complicated devices. Manufacturing them necessitates a series of interconnected stages carried out by several different companies. Production necessitates a plethora of specialized equipment, as well as hundreds of unique materials and specialty chemicals.
Europe has long been a key player in the semiconductor industry's development. Existing semiconductor firms have chosen to focus on profitable specialized markets due to strategic decisions. Sensors, power, and radiofrequency chips are specialized sectors where European manufacturers remain competitive. Infineon, NXP, and STMicroelectronics are the primary integrated device manufacturers (IDMs) in the EU. Their chips are primarily designed for use in the automotive and industrial industries. Other chips for these industries may be created by EU firms but manufactured in non-European foundries in Asia.
An EU Chips Act will promote economic growth. To play a leading position in sectors such as AI, additional investments in the semiconductor industry are required. Europe is well positioned in the automotive and industrial sectors, with strong manufacturing and design capabilities. Their market positions will be aided by investment in R&D for their essential technology. Furthermore, encouraging investment in European 5 nm node semiconductor manufacturing capacity will certainly positively impact the larger economy and the European chip manufacturing ecosystem. We expect the EU to strengthen its position as a technology leader in several areas of the semiconductor value chain based on what we currently know from the EU Chips Act.