Demand for Potato Chips Soars in Europe
In a move to establish Europe as a key player in the global semiconductor industry, Taiwanese chipmaker TSMC has reached an agreement on Tuesday to construct a plant in Germany, involving a significant investment.
The US and China are locked in a fierce competition to dominate the chip industry, and Europe is investing billions to keep up.
– Why are the chips in a hurry?
Semiconductors are tiny components found in every electronic device, from children’s toys and smartphones to electric cars and advanced weapons.
The Covid pandemic and subsequent border shutdowns caused a chip shortage and halted much of the tech industry in 2020 and 2021.
The crisis spurred governments into action, with the United States and China taking increasingly stringent measures to secure supply chains.
– What is Europe doing?
Europe proposes a law to support investments in industry.
The so-called Chips Act, which is winding its way through the EU’s legislative processes, aims for 43 billion euros ($49 billion) in investments from public and private entities.
The goal is for the EU to capture 20 percent of global chip production by 2030, which would mean quadrupling its current production.
– Who invests?
So far in Europe, Germany is ahead.
TSMC’s investment comes two months after Berlin signed a deal with Intel to build a 32 billion euro factory.
Germany also made massive deals with US-based Wolfspeed and homegrown Infineon earlier this year.
However, Intel’s deal sparked controversy.
The estimated cost of the Intel factory almost doubled, and sources told AFP that the government had promised 9.9 billion euros in public subsidies.
France also announced in June that it would invest 2.9 billion euros in a factory run by the European multinational STMicroelectronics and the US-based GlobalFoundries.
– Is Europe on the side?
The United States has introduced a series of measures aimed at halting cooperation between US and Chinese companies, and Beijing has cracked down on export controls on key materials.
Although the EU has called on both sides to ease measures that benefit European companies, the bloc has yet to come up with an organized response.
Instead, individual countries have taken the initiative.
The Netherlands, which has a key position in the industry thanks to equipment manufacturer ASML, announced in February that it would introduce export controls in September.
The move was widely seen as a way to block China when the Netherlands was under pressure from the US.
And Germany blocked the sale of two chip companies to China last year, citing national security concerns.
– Who are the leaders?
The semiconductor industry is truly globalized from design to manufacturing and end use.
Almost all the raw materials needed for the production of chips – silicon, germanium and gallium – are produced in China.
Taiwan, home to the world’s leading chip manufacturers, produces more than half of the world’s output.
Top chip designers such as NVIDIA and hardware manufacturers such as Apple are based in the United States.
The Semiconductor Industry Association, a U.S. trade organization, said U.S. companies accounted for 48 percent of the global industry last year.
South Korea, where Samsung is the world leader, was second with 14 percent and Europe was third with a nine percent market share.
