In recent years, there has been a global push by governing bodies to bolster local chip manufacturing. One significant development in this effort is the approval of the Chips Act by the European Union (EU). This regulation, which was first announced in February 2022, aims to enhance the semiconductor production capacity of EU member states through a €43 billion ($47.5 billion) investment. The goal is to increase the EU’s share of microchip production to 20 percent by 2030, as it currently stands at around 10 percent. The Council of the European Union hopes that this initiative will not only attract investment and foster research and innovation but also ensure that Europe is prepared for any future chip supply crisis. It is worth noting that the semiconductor industry is projected to reach a value of $1 trillion by 2030, with smartphones, servers, data centers, and storage applications driving this growth.
The Chips Act is expected to reduce the EU’s dependence on foreign entities, such as China, for semiconductor production. Héctor Gómez Hernández, the Spanish Minister for Industry, Trade and Tourism, expressed his optimism about the development, stating, “With the Chips Act, Europe will be a frontrunner in the world semiconductors race.” He emphasized that this initiative would lead to new production plants, investments, and research projects. Furthermore, in the long run, it would contribute to the renaissance of Europe’s industry and reduce foreign dependencies.
The EU’s approval of the Chips Act followed a similar move by the United States. In 2022, President Biden signed the CHIPS and Science Act into law, making $52 billion in funding and tax credits available to the country’s semiconductor industry. Of this amount, $39 billion was specifically allocated to semiconductor manufacturing initiatives, and applications for funding opened in the spring of 2023.
These initiatives by the EU and the United States highlight the recognition of the critical importance of local chip manufacturing for national security and economic growth. The COVID-19 pandemic exposed vulnerabilities in global supply chains, particularly in the semiconductor industry, leading to supply shortages and increased prices. Consequently, governments worldwide have taken proactive measures to enhance their domestic chip production capabilities to avoid future disruptions.
Supporting local chip manufacturing offers numerous benefits. Firstly, it reduces reliance on foreign entities and mitigates geopolitical risks associated with potential disruptions in supply chains. By promoting domestic chip production, countries can enhance their self-sufficiency and protect their critical industries. Additionally, local chip manufacturing helps to foster domestic innovation, research, and development. It creates a favorable ecosystem for collaboration between academia, industry, and government, driving advancements in chip technology and ensuring a competitive edge in the global market.
Furthermore, increased chip manufacturing capacity stimulates job creation across various sectors. The semiconductor industry is highly labor-intensive and requires skilled workers in various fields, including engineering, manufacturing, and research. Thus, investing in chip manufacturing contributes to employment growth and the development of a highly skilled workforce.
Both the EU and the United States’ initiatives aim not only to expand chip manufacturing capacity but also to support research and development in the semiconductor industry. These investments will empower scientists and engineers to develop cutting-edge technologies, improve chip design, and enhance manufacturing processes. Additionally, the funding will likely be directed towards promoting sustainable and environmentally friendly chip production methods, reducing the industry’s carbon footprint.
It is essential to recognize that boosting local chip manufacturing requires collaboration among governments, industry stakeholders, and academia. Governments can provide financial incentives, tax credits, and regulatory support to attract investments and stimulate innovation. Industry players, including chip manufacturers, equipment suppliers, and technology companies, can leverage these opportunities to establish or expand manufacturing facilities. Universities and research institutions can play a crucial role in developing talent, conducting research, and fostering innovation through collaborations with industry partners.
In conclusion, there has been a global push to boost local chip manufacturing, driven by the recognition of its strategic importance for national security and economic growth. The EU’s approval of the Chips Act, along with the United States’ CHIPS and Science Act, demonstrates the commitment of these regions to strengthen their semiconductor industries. These initiatives will not only reduce dependence on foreign entities but also stimulate research, innovation, job creation, and the development of a skilled workforce. By investing in chip manufacturing, governments aim to secure their supply chains, drive technological advancements, and ensure their countries’ competitiveness in the global market.
