European chips, not giving up

In 2022, the European Union launched the EU Chips Act, proposing to increase Europe's share of the global semiconductor manufacturing market from the current less than 10% to 20% by 2030. This is an ambitious goal, symbolizing Europe's desire to reduce its over-reliance on Asia and the United States in terms of digital economy and technological sovereignty.

At that time, European Commission President Ursula von der Leyen also stated that Europe accounted for about 10% of global chip production, and doubling the market share was not an unattainable task.

However, nearly three years have passed, and the controversies and criticisms surrounding the act have become increasingly evident. Issues such as slow project advancement, weak ecosystem, and unrealistic strategic goals have raised doubts from several mainstream European media outlets.

At the same time, Europe has not stopped its efforts. In advanced equipment, power devices, RISC-V architecture, and attracting international giants, the European semiconductor industry is still striving to build its own value chain and strategic depth.

The Real Dilemma of the EU Chips Act

In fact, when the act was proposed in 2022, many believed that the 20% target was overly unrealistic.

They argued that this was not a matter of the European Commission lacking ambition, but rather that the Commission seemed to fail to understand the scale of the task. As early as 2020 and 2021, market analysts had assessed that, in terms of value, Europe only purchased about 8.5% of global semiconductors and has long faced a significant semiconductor trade deficit.

Moreover, the advanced chip manufacturing based on 300mm wafers, which politicians now emphasize for strategic reasons, has mostly been outsourced overseas. In fact, according to market analysis firm IC Insights at the time, by 2014, Europe's "ownership" in 300mm wafer chip manufacturing had dropped to 2%, while the "actual production location" was even below 1%.

In other words, if Europe wants to return to the chip manufacturing industry, it must almost start from scratch. This will be a project costing over 100 billion euros, and success is not guaranteed, as other regions have already invested similar or even higher amounts based on their existing capabilities in logic chips and memory chips.

So what has the actual situation been like in these three years?

Although the act set inspiring goals, in terms of specific implementation, most investment projects have been slow to materialize, with some plans remaining on paper. For example, Intel announced plans to establish an advanced wafer factory in Magdeburg, Germany, with a total investment of over 30 billion euros. Initially scheduled to start construction in 2023, the project has been repeatedly delayed due to rising energy prices, supply chain uncertainties, and subsidy negotiations. Even if the EU and the German government ultimately reach a subsidy agreement, the project may not see mass production results until around 2030.

Similar situations have occurred in Italy, France, and Poland. Many planned factories are still in the planning or early construction stages, creating a significant gap in the rhythm of "landing - production - expansion" compared to global peers The European Commission stated that the Court of Auditors is aware of a total of 29 potential or ongoing capacity investment projects. Among them are 13 "new facility" projects, of which 4 have been approved and 9 are in planning, including Intel's yet-to-start Magdeburg factory. These 13 projects account for the largest share of known investments: €26 billion comes from national aid, and €60 billion comes from the manufacturers themselves.

This means that without the €30 billion Intel factory, more than one-third of the investments would be unachievable, while one of the largest remaining projects is the European Semiconductor Manufacturing Company (ESMC) in Dresden, in which TSMC is involved, with an investment amount of €10 billion.

According to data from SIA and BCG, even with the €30 billion Intel investment included, the outlook for Europe remains bleak. By 2032, the EU's investment will reach €147 billion, while the total global investment will reach €2.16 trillion. This also means that to achieve the 20% target, more funds need to be invested. Anne-Marie Turtelboom, a member of the European Court of Auditors, summarized at a press conference that the commitments of the "EU Chips Act" are "seriously disconnected from reality."

Formal criticisms are also emerging. For example, the European Commission can hardly supervise these investments, as most of the funds come from member states. The "EU Chips Act" relaxed funding rules, allowing countries to invest large sums into individual companies. The funds allocated by the European Commission are about €4.5 billion, accounting for only about 10% of the total funding.

Moreover, the European Commission approves funding applications but lacks follow-up supervision mechanisms. In addition, the European Commission does not seek further funding from other EU funds, including the European Structural and Investment Funds (ESI Funds), the European Fund for Strategic Investments (EFSI), and the Recovery and Resilience Facility (RRF) projects. Investments from the European Investment Bank (EIB) are also not included in the tracking of EU funds.

Media reports point out that the European chip industry has long been concentrated in "non-advanced process" areas such as analog chips, automotive components, and high-voltage power devices. Although profitable, it lacks deep mastery of advanced processes (such as below 5nm). More importantly, "soft support" aspects such as EDA tools, packaging technology, IP licensing, and operating systems have not formed a closed-loop ecosystem in Europe, and talent reserves and R&D capabilities are relatively weak.

It is noteworthy that the European Commission has adjusted its market share target for Europe in 2030 to 11.7% in its latest forecast. However, this figure refers to the "global market value chain share calculated by revenue," which includes ASML, the lithography equipment manufacturer. Although ASML makes a significant contribution to the European economy, this changes the statistical caliber, making the comparison "apples to oranges."

The European Court of Auditors cited estimates from the Boston Consulting Group, indicating that Europe's market share in global chip manufacturing will be 8% by 2030, a slight increase from 7% in 2020 The drop from the originally planned 20% to 8% is quite significant.

Europe is still striving to break through

Despite ongoing criticism, Europe's semiconductor policy has not halted. At the institutional and resource levels, the EU and its member states are indeed gradually addressing shortcomings and promoting the reconstruction of the industrial chain.

In fact, Europe still holds an irreplaceable global position in the semiconductor equipment field, with the Netherlands' ASML being the only manufacturer capable of mass-producing EUV lithography machines, thus holding an advantage in technology and industry bargaining. Meanwhile, STMicroelectronics, Infineon, and NXP are continuously expanding their influence in automotive chips, industrial automation, and power devices, actively extending towards third-generation semiconductors such as silicon carbide and gallium nitride.

The technological accumulation and market share of these local enterprises, while not directly leading to breakthroughs in advanced logic chip production capacity, constitute an irreplaceable part of the European semiconductor supply chain.

In addition, Europe's advancement in the RISC-V architecture has been one of the highlights in recent legislative progress. In 2023, the EU funded the establishment of the "OpenVerse" project, aiming to build an open instruction set architecture (ISA) platform without relying on the American ARM and x86 ecosystems, to serve strategic emerging industries such as edge computing, smart vehicles, and low-power embedded devices.

Companies like SiFive and GreenWaves Technologies are active within the European ecosystem, and research institutions such as Germany's Fraunhofer Institute, France's CEA-List, and Spain's Barcelona Supercomputing Center (BSC) are also participating in RISC-V core optimization and compiler toolchain development, becoming important nodes in promoting the autonomy of open-source chips.

RISC-V represents a strong attempt by Europe to build chip autonomy in a "non-monopolistic, highly controllable" direction. Although the ecosystem is still in its early stages, its strategic significance is comparable to that of wafer fab construction, especially in application scenarios such as automotive, IoT, and AI edge devices, which have practical implementation value.

Finally, several projects promoting the development of universities, startups, and small and medium-sized enterprises in Europe are making good progress. This includes a new European chip design and development platform led by imec, which includes electronic design automation (EDA) tools. This platform will replace the Europractice platform, which has been in existence for 30 years. An investment of 400 million euros has been made for a pilot plant for testing chip production, which will be built in the coming years.

It is understood that with this platform, so-called fabless chip companies will be able to quickly and easily access suitable tools through a cloud environment. These tools include design software, training, financing, and technologies and libraries related to chip design. Additionally, these companies will also receive assistance in chip development, testing, and manufacturing.

The first batch of companies should be able to start using the platform in early 2026. They will then be able to access support programs that include guidance, acceleration tracks, and financial assistance to turn innovative chip ideas into reality For the European semiconductor industry, the original development foundation still exists, and with unremitting efforts, part of the Chip Act has achieved decent results.

From Ideal to Reality

Looking back at the implementation path of the European Chip Act, it can be found that although its initial vision was reasonable, the path design and resource allocation may not align with reality.

Some media have pointed out that Europe should not be obsessed with advanced processes below 2nm, but should develop system capabilities: including vertical integration of chip design - packaging - modules - complete vehicles or complete machine systems. Power devices, industrial control chips, automotive SoCs, and edge intelligence are application scenarios where it has natural advantages and should be prioritized.

In addition, the current issues of member states acting independently, protracted subsidy negotiations, and an inefficient approval system are constraining the overall industry rhythm. In the future, a unified project approval channel and a transparent supporting mechanism need to be established to improve project execution efficiency.

In fact, beyond Europe, "Chip Acts" led by other countries are also facing real pressures and policy reflections. Although the U.S. "CHIPS and Science Act" has a total amount of up to $52.7 billion, as of mid-2024, concerns have arisen in the industry due to delayed funding progress and uneven allocation of funds.

Despite initially attracting a large number of chip companies to invest in the U.S., challenges such as project delays, labor shortages, and difficulties in controlling yield rates for advanced processes have led to some projects announcing delays, prompting a reassessment of the incentive structure between the government and enterprises.

Similarly, Japan originally planned to attract leading global manufacturers to rebuild domestic manufacturing through its "Semiconductor Strategy," but as TSMC's Kumamoto plant's first-phase capacity mainly serves automotive and mature processes, the industry has begun to question whether it can truly reshape Japan's voice in the advanced semiconductor field. South Korea, while advancing its "National High-Tech Strategy" based on the technological accumulation of Samsung and SK Hynix, has started to quietly adjust its strategy due to U.S. restrictions on advanced memory chip exports and geopolitical fluctuations.

These situations indicate that under the multiple constraints of geopolitical factors, market rules, and industrial foundations, the "Chip Acts" of major global economies are moving from strategic concepts into the deep waters of policy reality. Countries are beginning to realize that relying solely on fiscal stimulus is insufficient to build a complete semiconductor ecosystem; there must be a greater focus on the dynamic balance between industry chain coupling, talent cultivation, manufacturing capabilities, and international cooperation.

In Conclusion

The European Chip Act is an effort to break structural bottlenecks, and the difficulties encountered in the process are understandable, but they do not represent a failure in the end. Europe's advantage has never been in scale expansion, but in technological depth and system integration capabilities. As long as there is continuous effort in ecosystem construction, promoting open architecture, and cultivating local talent, Europe still has the opportunity to find a distinctive and irreplaceable position in the future global semiconductor landscape.

This also serves as a warning to us that in the face of global semiconductor competition, we should not merely chase after others' footsteps, but rather find our own rhythm and methods. The significance of the Chip Act may lie in prompting everyone to rethink: what kind of semiconductor industry do we truly need? Risk Warning and Disclaimer

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