Taiwanese semiconductor manufacturer TSMC’s EUR10 billion investment in a new chips factory in Germany marks the “culmination” of the EU’s industrial strategy of the past few years, EU’s Single Market Commissioner Thierry Breton said.
The investment, facilitated by the newly-adopted EU Chips Act, is a sign that “Europe is taking its destiny back into its own hands”, Breton told French radio broadcaster RTL on Thursday (10 August).
On Tuesday, Taiwanese semiconductor mogul TSMC announced it will invest over EUR10 billion in Germany in return for EUR5 billion in state aid, to both build and operate a microchips plant. The project also received investments from European companies Bosch, Infineon and NXP, which will each have a 10% stake.
TSMC’s move follows a number of other investments in the semiconductor sector across the EU, including a EUR30 billion pledge by Intel in Saxony-Anhalt (EUR10 billion of which is state aid), and the building of a new factory in France by STMicroelectronics and GlobalFoundries – with the government providing EUR2.9 billion worth of subsidies.
“In Germany, more money is already being invested in new settlements and site projects by semiconductor companies than the entire European Chips Act envisaged for the continent,” Silicon Saxony, a regional lobby group, also said.
Semiconductors are an essential part of any electronic device, and can be found in electric vehicles, smartphones or computers.
“We were too na?ve”
“We had our own [production] capacities thirty years ago, but we progressively lost it to Asia” Breton told RTL. The EU accounted for only 9% of world production in 2019, according to the European Commission.
The EU’s Chips Act aims to bring industrial capacities back onto European soil and ensure higher levels of independence against Asian and American counterparts, by setting a 20% EU-production goal by 2030.
So far, this amounts to 68 semiconductor technology projects across the EU, worth EUR100 billion in total – meaning the 20% goal might even be met ahead of time, according to the Commissioner.
“We had to change our competition rules. We were too na?ve, and needed to adapt our rules to the realities of this world,” to face Asian competition, Breton said in support of the Act, further claiming that state aid was necessary to support “heavy” private investments.
In March, the European Commission announced it would relax state aid rules so member states had more leeway to co-invest with private actors on projects that further the green transition and reinforce the EU’s industrial independence.
Critics argue state aid may distort the single market, as it favours member states with higher fiscal firepower – such as the likes of France and Germany – to the detriment of smaller countries.
If TSMC’s investment is approved by the European Commission, then “Germany will be the European country to benefit most from the Chips Act,” Mathieu Duch?tel, Director of International Studies at French think-tank Institut Montaigne, wrote in a EURACTIV op-ed.
“In this case, the Commission will have authorised precisely what European competition law sought to prevent by prohibiting industrial subsidies: concentration in countries with sufficient budgetary leeway to support large-scale projects,” Duch?tel warned.
Careful with China
The EU’s industrial and technological independence comes hand-in-hand with efforts to decouple from China, which mines and refines key raw materials that are necessary not only for semiconductors, but the EU’s green transition at large.
In July, China imposed export bans on germanium and gallium, threatening global supply chains. These two metals are used in chips, defence technologies and renewable energies.
“China is, and will continue to be a significant commercial partner to the EU,” Breton said on RTL, though added that “we are careful to limit [Chinese] imports of the most sensitive technologies” into the EU, which may have been manufactured in ways “other than originally intended”.
This includes matters pertaining to AI, finely-graved chips – such as 2-nanometer generation – and quantum technologies.
On Wednesday (9 August), US’s Joe Biden also signed an executive order narrowly prohibiting US investments in sensitive technologies in China, citing national security threats.
“The end of naivety: this is the politics I strive for,” Breton said.
[Edited by Nathalie Weatherald]
Read more with EURACTIV
