Strategies and challenges in global competition.
The adoption of the European Chips Act in July 2023 and its entry into force in September 2023 underscore the high strategic importance of semiconductor production. The legislative package addresses supply chain bottlenecks, geopolitical risks, and international competition from programs originating in the US and China. It focuses on the reasons for government subsidies, the differences between funding models, and the role of research and development.
Chips are indispensable for future-oriented industries such as AI, e-mobility, telecommunications, defense, renewable energies, and robotics. Geopolitical tensions are increasing the pressure on technological sovereignty and security. The COVID-19 crisis exposed the vulnerability of global supply chains and led to massive production outages, for example in the automotive industry.
Industry challenges
Semiconductor manufacturing is extremely capital-intensive: modern factories cost several billion euros. High barriers to entry and complex scaling processes make the industry virtually inaccessible to newcomers. Only a few players possess the necessary capital and expertise.
Global funding strategies
Since 2014, China has invested more than $100 billion in semiconductor production through its "Big Fund." The US has been supporting its industry since 2022 with the CHIPS and Science Act, which allocates $52 billion to the sector. Countries such as Japan, South Korea, India, and Vietnam are also making massive investments.
EU funding in detail
EU funding for the semiconductor industry is provided under the EU Chips Act, which entered into force in September 2023. With a total investment volume of €43 billion in public funds and a further €43 billion in private investment, the EU aims to increase the European share of global chip production to 20 percent by 2030. This funding comprises three key pillars: the expansion of technological capacities through the Chips for Europe initiative, the establishment of first-of-a-kind factories such as the new megafab in Dresden, and strategic monitoring to ensure resilience to crises. Particular emphasis is placed on networking researchers with industry to accelerate the transfer of innovations into production. In this way, the EU is not only relying on subsidies, but also on strengthening Europe's technological resilience and competitiveness in the long term.
Special features of the EU approach
The Chips Act differs from the programs of the USA and China in its federalized structure and focus on resilience rather than complete self-sufficiency. Partnerships with Taiwan, Japan, and South Korea, as well as investments in research and pilot lines such as APECS, are intended to accelerate the transfer of innovations into industrial applications.
Outlook and Risks
In the US, political uncertainty is leading to potential subsidy reductions. The EU is expected to miss its 20% target for nuclear power generation by 2030, prompting discussions about a "Chips Act 2.0." China continues to invest in its own production capacity but is grappling with trade restrictions and corruption scandals. Global trade conflicts remain a risk factor.
Source: www.portal.nmwp.de
