• Bob Hancké

Europe’s call for semiconductor factories: A solution in search of a problem?

Supply chain bottlenecks and chip shortages for the car industry have led to calls for Europe to develop its own semiconductor capacity. But splits have already emerged between those who support the idea and those who think Europe should stick with what it does well. Bob Hancké takes stock of what is not said in the debate.

Semiconductors – also known as computer chips – appear to be permanently in the news today. The big shifts in industry and related services that are captured under the heading Industry 4.0, the (slow but increasingly faster) shift towards AI-based products and services, the now probably irreversible turn towards electric vehicles that require a lot more electronics, and a variety of other shifts in geopolitics, product market strategies and organisations have significantly increased demand for chips just at the moment that their supply has dried up because of Covid-19, other cyclical events and dark clouds over free trade between Asia, which produces the lion’s share, and the rest of the world.

Small wonder, then, that many raise the need for Europe to build its own semiconductors in Europe to increase its strategic autonomy. While some of the problems may be cyclical, others, such as the dark clouds over Asia’s status as the workshop of the world, seem to have taken on a more long-term menacing character.

Semiconductor manufacturing is a sector with several features that potentially make it one of the few areas where Europe could thrive. It combines high value-added products, the need for high-quality design and production, high workforce skills, and they have to be made in complex manufacturing settings (so-called ‘clean rooms’). As such, the idea of developing this sector in Europe is therefore not wrong.