2023-08-07 17:30:17
According to industry representatives, however, the state subsidies are far from sufficient. “The 43 billion from the Chips Act can only be the beginning,” said the CEO of the chip supplier AT&S, Andreas Gerstenmayer, the Handelsblatt. “We still have to add a zero so that we can keep up with the rest of the world.” The listed Austrian company supplies Apple, among others.
The EU has big ambitions. By the end of the decade, the Brussels Commission intends to more than double Europe’s share of global chip production from currently under ten to 20 percent. For this purpose, it enables subsidies of 43 billion euros via the Chips Act.
All major chip nations are currently promoting the settlement of semiconductor factories with sums in the billions. Despite recent European successes, according to Everstream Analytics, manufacturers are investing around five times as much in new capacity in North America as in Europe. In the East Asian chip nations of Japan, South Korea and Taiwan, about four times as much money flows into modern factories. Local producers are also investing many billions in China.
However, the subsidies to attract the companies are controversial in Germany. It would make much more sense to make the location attractive to investors through tax cuts, said Clemens Fuest, head of the Ifo Institute recently. The economic researcher also doubted that the factories would make Germany more independent in the supply of semiconductors. The economist explained that if the components were to become scarce one day, for example because the important producer country Taiwan was no longer a supplier, international corporations such as Intel would sell them to the world with the highest bidder.
“The subsidies are not gifts”
CEO Gerstenmayer counters: “The subsidies are not gifts to our industry. Rather, it compensates for the competitive disadvantages that we have in Europe in terms of wages, energy and taxes.” In other words, without government subsidies, industry would sooner or later leave Europe.
The fact that Europe will one day supply itself with chips is actually unrealistic. Ondrej Burkacky, semiconductor expert at McKinsey, says: “Europe is currently a long way from becoming self-sufficient in chips. This would require 60 additional semiconductor factories just for front-end production.” The front-end is the core of chip production.
Politicians hope that the planned plants will at least enable Europe to supply key industries such as the automotive industry more reliably. The biggest beneficiaries of the Chips Act so far are the US company Intel and now TSMC from Taiwan. In addition, European semiconductor manufacturers Infineon and STMicroelectronics are building new plants in the EU with public support.
Meanwhile, experts warn that Europe must take care of the entire value chain. “It’s important to also keep an eye on the upstream and downstream areas,” says McKinsey’s Burkacky. Testing and packaging of the chips, for example, the so-called back-end, has so far mainly been done in Asia because it’s cheaper there.
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But it could be worth attracting suppliers in this field as well. Chip specialist Burkacky: “Technologically, the back end is becoming more and more demanding. This is an opportunity for Europe to position itself here.”
Apart from the subsidies, Europe is not as bad a location as is often claimed, says AT&S boss Gerstenmayer. “Investing in the US is not necessarily a better choice. Because the shortage of skilled workers is at least as bad there as it is here.”
TSMC lacks staff
The chip industry is struggling worldwide to recruit suitable staff. TSMC just pushed back the start of operations at its multi-billion dollar new Arizona plant by a year to 2025. The Taiwanese lack the necessary experts in America. “We are working to improve this by sending skilled technical workers from Taiwan to the US,” said TSMC Chairman Mark Liu.
Production at AT&S
The head of AT&S, Andreas Gerstenmayer, calls for far more subsidies for the chip industry than before.
(Photo: AT&S)
AT&S boss Gerstenmayer is now demanding greater commitment from the EU. The fact that TSMC is currently settling in Germany is not only due to the Dresden chip cluster. It also has to do with the fact that smaller EU nations like Austria cannot afford enough subsidies.
Because most of the funding comes from national budgets. Gerstenmayer: “It would be important to have a European fund to support the chip industry. Because currently only large EU countries can really afford subsidies in the billions.”
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