EU plans to double chip production to tackle shortages

11 March 2021

The European Union (EU) has set out a target to produce 20% of world semiconductor output by 2030. 

The ambitious aim was outlined in  the EU’s ‘Digital Decade’ plan for digital transformation in Europe. 

Under the vision, the EU would effectively double the amount of “cutting-edge and sustainable” semiconductors it makes in the next nine years. In 2020 it made 10% of the world’s chips. 

The EU said it must “carefully assess and address any strategic weaknesses, vulnerabilities and high-risk dependencies” that present risks to its target, and accelerate associated investment.

Ursula von der Leyen, European Commission president, said: “Europe has a lifetime opportunity to build back better... The pandemic has exposed how crucial digital technologies and skills are to work, study and engage – and where we need to get better. 

“We must now make this Europe's Digital Decade so that all citizens and businesses can access the very best the digital world can offer. Today's Digital Compass gives us a clear view of how to get there.”

Thierry Breton, commissioner for the internal market, said: “As a continent, Europe has to ensure that its citizens and businesses have access to a choice of state-of-the-art technologies that will make their life better, safer, and even greener – provided they also have the skills to use them. In the post pandemic world, this is how we will shape together a resilient and digitally sovereign Europe.”

The target comes as buyers were warned that global constraints on the supply of semiconductors show “no signs of improving any time soon”, with the IT and automotive industries among those affected by shortages.

Factories manufacturing cars around the world have been forced to close their doors due to semiconductor shortages with brands including Volkswagen, Honda, Ford and Renault impacted. 

Last week, a European chip maker warned that car manufacturers needed “a different model” for procuring critical chips following supply constraints.

Reinhard Ploss, chief executive of Infineon, told the Financial Times: “The auto industry cannot say, ‘Ok fine, we don’t need [any more chips], and then come back later and say, ‘Now we need them’.

“They have to consider the long lead times [in the semiconductor sector] of about half a year.”

Last month, US president Joe Biden ordered a review into the supply chain of semiconductors as a result of the shortages.

The executive order said: “Over the years we have underinvested in semiconductor production – hurting our innovative edge – while other countries have learned from our example and increased their investments in the industry.”

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