EU competition chief recognizes that it is unrealistic for semiconductors to be completely self-sufficient

The European Union consumes hundreds of millions of different types of chips each year, but the amount of chip manufacturing is not much. Although Germany and other countries encourage wafer fabs to build new plants, the capacity is still limited. In the past year, due to the lack of chips in Germany’s pillar industry, automobiles have caused factories to cut production or temporarily stop production, which shows that there is a big gap between supply and demand.

Companies such as TSMC, Samsung, and Intel spend tens of billions of dollars in annual capital expenditures on wafer manufacturing, and the research and development of new process technologies will need to invest billions of dollars. According to an analysis by industry insiders, if you want to build a competitive semiconductor industry, you need to spend more than $150 billion within five years through direct assistance, tax relief, and incentive measures, and the probability of success is not high. Although the European Union has formulated relevant plans to increase semiconductor technology and production capacity, it is almost impossible to achieve self-sufficiency, such a large-scale investment, so it will ultimately rely on external chip supply.

“The numbers I hear of, sort of, the upfront investments to be fully self-sufficient, that makes it not doable,” Vestager, executive vice president of the European Commission, told CNBC in an exclusive interview in London. “What is important is that there is a different level of production capacity in Europe,” she said.

At present, the European region basically does not produce equipment such as smartphones and PCs. It mainly produces automobiles, consumer electronics, and industrial equipment. Most of the chips used do not need to use advanced process node technology, and generally do not rely on advanced technology. These chips generally use mature semiconductor process technology. The EU hopes to increase production capacity to ensure its economic development and try to avoid the chip supply crisis similar to the recent automotive industry. With the development of society, refrigerators and other equipment used in daily life will also join the Internet of Things, resulting in an increasing number of chips required. This is also the reason why the EU is eager to increase production capacity.