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European Union is planning to offer subsidies to chipmakers

Wednesday, April 28, 2021

In response to supply chain vulnerabilities exposed by the global semiconductor shortage, the European Union is planning to offer subsidies to chipmakers, including Intel and Taiwan Semiconductor Manufacturing Company (TSMC), to build new plants in Europe.

In an interview Monday with Germany's Frankfurter Allgemeine Zeitung, EU Commissioner for the Internal Market Thierry Breton said the chip shortage, particularly in its effect on the auto industry, had shown "how urgently we need to make our supply chains resilient."

Specifically, he said, Europe is interested in building manufacturing capacity for the more advanced 5-, 3- and 2- nanometer chips, which are currently only produced in America and Asia.

To achieve this, the article said, the EU is considering a state-backed initiative similar to its European Battery Alliance, but also recognizes that it cannot succeed without the participation of major international companies.

"Europe is not naïve, but we also don't want to isolate ourselves," Breton said. As such, the EU will build bridges to international partners, "but with us in the driver's seat."

Citing a source within the European Commission, the article said Breton was scheduled to hold meetings this Friday with Intel CEO Pat Gelsinger and a senior executive at TSMC, while talks with Korea's Samsung Group are also planned.

Specifically, the person said, the talks with Intel are expected to focus on a new factory it is considering building in Europe, which would be "considerably larger" than the GlobalFoundries plant in Dresden that is currently the largest on the continent.

Such mega factories, which cost US$10 billion to US$20 billion, are already being built in Asia and America, the source said, citing TSMC's planned Arizona plant as an example.

"Europe is working to keep up with this and is holding out the prospect of aid in the double-digit billion Euro range," the person said.

TSMC declined comment Tuesday on the reported meeting with Breton and the news that it was being courted by the EU. Several industry watchers, however, downplayed chances that the talks would bear fruit.

Ray Yang (???), a supervisor at the Industrial Technology Research Institute's (ITRI) Industrial Economics and Knowledge Center,said Europe accounts for only 6 percent of TSMC's customers, making it an undesirable choice for a manufacturing base.

Liu Pei-chen (???), a researcher at the Taiwan Institute of Economic Research (TIER), said factors such as costs and the scale of the European market made a factory unlikely, but said an R&D center for automotive chips might be a greater possibility.

By: DocMemory
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