The EU’s strategy to achieve autonomy in microchips reveals concerning gaps. The report from the European Court of Auditors highlights a disturbing disconnect with the reality of modern industrial challenges. Among the major challenges, global competition is intensifying, particularly against giants like China and the United States. Europe’s ambitions now seem largely aspirational, despite promises of financial support. The future of advanced technologies, such as *artificial intelligence* and the *automotive sector*, depends on an immediate and coherent strategic response.
A damning report from the European Court of Auditors
According to an explanatory report from the European Court of Auditors (ECA), the European Union’s strategy regarding microchip production is manifestly disconnected from reality. This document emphasizes the EU’s lack of capacity to achieve its target of 20% of global production by 2030, while global demand for semiconductors continues to rise due to increasing needs in the defense, green technologies, and artificial intelligence sectors.
Ambitions deemed unrealistic
Annemi Turtelboom, head of the audit, stated that the ambitions laid out in a 2022 European Commission document were essentially “aspirational.” The EU’s desire to claim 20% of the chip market is based on a percentage considered out of sync with the sector’s reality. The investments required to reach this target are complicated by a lack of coherence in funding, which is fragmented across various programs and tax regimes.
Consequences of microchip shortages
Microchip shortages can have severe repercussions for industries. The report indicates that, following the pandemic, shortages of microchips have led German automakers to reduce their production to levels equivalent to those of 1975. Essential components are present in almost all modern devices, including vehicles, which could have as many as 3,000 microchips by 2030.
The Chips Act: a step towards the future?
To try to remedy this situation, the EU introduced the Chips Act in 2022, aimed at reducing the Union’s dependence on foreign producers for critical components. Although progress has been made with the implementation of these new regulations in 2023, a rapid and coordinated execution remains necessary. The ECA emphasizes that this framework was developed in urgency, without a genuine mandate to manage national investments.
Economic challenges in the face of global competition
Competition in the global microchip market is intensifying, with China preparing to surpass Taiwan as the world’s leading manufacturer with 22% market share by 2030. In contrast, the EU is expected to reach only 8% of its production on its territory by then, necessitating a fourfold increase in its production capacity to reach 20%. Dominant companies such as TSMC, Samsung, and Intel are investing astronomical amounts, making European ambitions particularly difficult to achieve.
Impact of funding concentration
The report also draws attention to the concentration of investment among a limited number of major players. When a large-scale project fails, this shortcoming has enormous consequences for achieving market share objectives. A key investor like Intel recently halted its plan to build a mega-factory in Magdeburg due to delays, which has been perceived as a setback for the EU.
The EU’s efforts in the face of market reality
Weakened by several hundred billion dollars in investments from competitors like TSMC, which has a budget of $425 billion over three years, the EU is struggling to position itself effectively. Nonetheless, a spokesperson for the European Commission stated that the Chips Act has catalyzed funding of 80 billion euros, creating a foundation to cement Europe’s position in the global semiconductor market.
Frequently asked questions about the EU’s microchip strategy
What is the EU’s target for microchip production by 2030?
The EU aims to produce 20% of microchips globally by 2030.
What are the reasons the EU may not reach its microchip production target?
Official auditors believe the EU’s goals are “essentially aspirational,” due to a lack of adequate investment and a fragmentation of financial resources.
How do trade tensions with the United States affect the EU’s microchip strategy?
Tariff threats on microchips from the United States could lead to a collapse of supply chains, making the EU more vulnerable.
What is the impact of microchip shortages on the European industry?
Microchip shortages can severely disrupt sectors like automotive, leading to a decrease in production, as seen with German manufacturers.
How does the EU’s Chips Act contribute to microchip production?
The Chips Act aims to reduce the EU’s dependence on foreign suppliers and seeks to boost local production, although its preparation has been deemed rushed.
What funding does the EU hope to mobilize for microchip production by 2030?
The EU aims to mobilize 86 billion euros by 2030 to support microchip production, but this remains far below the investments of major market players.
Why is the EU’s strategy considered disconnected from reality?
The strategy is perceived as disconnected due to a series of unrealistic promises and a lack of coherent financial resources to achieve the set objectives.
Which countries surpass the EU in microchip production?
China, the United States, Taiwan, and South Korea are market leaders, with China expected to surpass Taiwan by 2030.
What is the growing importance of microchips in modern technologies?
Microchips are found in a multitude of modern devices, including cars, where their number is expected to increase from 1,500 to 3,000 by 2030.
