Europe provides less than 10% of the world’s electronic chips, compared to 40% 30 years ago, while the United States now accounts for only 12% of the world’s semiconductor production.
At the start of the year, things are accelerating on both sides of the Atlantic to reduce Western dependence on Asia in the semiconductor industry. For Europeans and Americans, the issue is essential when the Old Continent produces less than 10% of electronic chips in the world, against 40% 30 years ago, while the country of Uncle Sam has seen its weight in the sector has shrunk by 25% to represent today only 12% of the world production of semiconductors. At the same time, Asia has become a juggernaut which concentrates 80% of world production, while the market should double by 2030 and weigh 1000 billion dollars.
Hit hard by the shortage of electronic chips caused by the Covid-19 pandemic, which has brutally increased demand in the sector, Europe and the United States want to gain power in order to acquire a form of independence. in the production of semiconductors. With that in mind, Brussels this week unveiled a €42 billion plan for Europe to host 20% of the world’s microchip production by 2030.
A 52 billion dollar plan in the United States
A few days earlier, the United States also made progress on the subject with the adoption by the House of Representatives of the America Competes Act, a 2,900-page text which plans to mobilize 350 billion dollars to stimulate American competitiveness against to competition from China. This major plan devotes in particular 52 billion dollars to boost the production of semiconductors in the United States. Like aerospace, where NASA now works closely with SpaceX, the US government hopes that this envelope will lead to similar relationships in the microchip sector.
However, this bill, undermined by political disputes between Republicans and Democrats, is advancing at a snail’s pace across the Atlantic. Before the House of Representatives voted in favor of this text, it had been approved by the United States Senate in June 2021. It will therefore have taken more than six months for the elected representatives of the House of Representatives to start agreement on a version of the bill that suits both sides.
“Whoever wins the race for future technologies will be the world economic leader”, then tweeted Democratic Senator Chuck Schumer, who defended this text, called “US Innovation and Competition Act (USICA)”. In any case, this bill will not win the sprint race to pass. In addition, a parliamentary shuttle is still necessary to harmonize the texts between the House of Representatives and the Senate. This could also take several months…
Biden wants to go fast… but not Congress!
This is bad news for Joe Biden, who sees his ambitious stimulus mechanisms slowed down, even dismantled, in the American Congress, as the midterm elections, next November, are fast approaching. In the $1.750 billion “Build Back Better” plan, blocked by Democratic Senator Joe Manchin in a Senate split equally between Democrats and Republicans, it was notably planned to allocate $150 million to create a “Manufacturing USA Institute ” and to introduce a new tax credit.
The slowness of the process of adopting the plan of 52 billion dollars for semiconductors contrasts with the measures taken by Joe Biden as soon as he arrived at the White House. Barely invested president of the United States, the former right-hand man of Barack Obama had notably signed a decree imposing a 100-day review of supply chains in the microchip industry. In the process, the American president had proposed an envelope of 50 billion dollars to make the sector more competitive and limit the risks of a new shortage of semiconductors.
The delusions of grandeur of TSMC, Samsung and Intel
If the idea is commendable, the extent of the means mobilized, both in the United States and in Europe, raises questions. And for good reason, the Taiwanese group TSMC plans to invest 36 billion euros only for the year 2022, after having put more than 25 billion dollars on the table last year. In total, the first subcontractor in the manufacture of electronic chips wants to invest 100 billion dollars over three years in its production units. At the same time, Samsung announced in 2021 an investment of $205 billion over three years to ramp up in semiconductors, biopharmaceuticals, artificial intelligence and robotics.
The South Korean giant notably plans to build a microchip factory in Texas for $17 billion. A news that should delight Joe Biden, who can also count on Intel ready to invest in the construction of a gigantic semiconductor production site in Ohio, in the United States. A disproportionate project, which could one day house the largest chip manufacturing complex in the world, bringing together eight factories. To complete this project, Intel plans to spread 100 billion euros of investment over at least ten years.
The American giant should also delight Thierry Breton, the European commissioner for the internal market who carried the “Chips Act”. Pat Gelsinger, CEO of Intel, has indicated that his group could invest 80 billion euros on the Old Continent over the next decade, in order to boost its production capacity of semiconductors against TSMC and Samsung, the two other industry giants. The American firm would have set its sights on Germany and the city of Dresden for its “megafab”, its new large production site in Europe, while Italy seems well on its way to hosting an assembly site.