TIMES.KY

Cayman Islands, Caribbeanand International News
Monday, Mar 20, 2023

In the global chips race, EU’s cash engine sputters

In the global chips race, EU’s cash engine sputters

Brussels is struggling to clear cash for Europe to rival the US on microchips.

The European Union is scrambling to cough up the public investment needed to try and go head-to-head with the world's leading chip producers in the United States, Taiwan and South Korea.

Europe is aiming to grab 20 percent of the global market share in microchips by 2030 with the European Chips Act, one of the EU's most ambitious industrial policies to date.

But a cornerstone of its budget is in question this week with both European Parliament lawmakers and European government officials quarreling over how to pay for the new chips push. And that risks torpedoing the whole plan.

Europe is trying to enter a global race to expand local microchips manufacturing, design and innovation. It's also trying to learn the lessons of a chips shortage over the past two years that shuttered European car plants and held back sales of consumer electronics. At the same time, chips are a new battleground for a geopolitical Cold War between the U.S. and China.

The European Commission talked big earlier this year by saying there would be €43 billion of public investment to back the EU's chip dreams. But even from the start, the EU executive struggled to explain just how that funding would come together.

That funding is now facing a whirlwind of questions and concerns in Brussels, as the Parliament and Council scrutinize the chips budget amid a push to get the legislation passed as soon as possible. That seems to be slowing down; crucial deliberations by government representatives have been scrapped from this week's agenda, underlining the difficulty in getting a deal.

Eva Maydell, a center-right member of Parliament, told lawmakers on Monday of the importance of making progress on chips money even as she seeks clarity from the Commission on the budget "in order for our promises to become reality and not castles made of sand."

"We cannot ignore the significant level of investment that our global competitors and partners are putting in similar initiatives," she said.


Cooking the books


Most of Europe's overall investment in the semiconductor industry will be subsidies from national governments that aim to lure private investment.

The EU's planned €43 billion framework included an €11 billion pledge to help bring research applications to the market. It was going to pay for it by taking €3.3 billion out of the EU budget. Half of that €3.3 billion would be taken from the EU's flagship R&D program Horizon Europe and half from its digital technology program Digital Europe.

European lawmakers are up in arms, warning that the EU's chips plans are eating away at funding for other potential projects. Parliament's lead member on the issue Karlo Ressler said it's "unfortunate" that the chips budget is based on taking money from elsewhere.

MEP Eva Maydell told lawmakers of the importance of making progress on chips money


Last week a group of lawmakers led by Maydell wrote to the Commission asking for "a detailed projection of funding available," writing that "there's increasing concern that the purported sums of funding available to support the ambition of the Chips Act may not materialize."


Countries at odds


The Chip Act's budget is a headache for EU countries too. Deputy ambassadors this month struggled with it as one of the three remaining open issues in the draft bill they are negotiating. Some capitals are worried that other research projects will fall victim to the chips rush, one EU diplomat said.

The destination of the chips cash is also raising hackles. Chipmakers are placing their projects in larger EU nations such as Germany and France, which can guarantee the public support needed to make the new investments happen.

"People are waking up to the reality that allowing member states to finance industry projects through national subsidies massively tips the scale towards big member states," said Niclas Poitiers, a research fellow at Brussels-based think tank Bruegel.

The Czech Republic, which currently lead talks between EU governments, had aimed to nail the Chips Act at a December 1 meeting of industry ministers. That seems unlikely now; at best they could do a deal on the legislation by excluding the budget issue, effectively kicking the can down the road.


The global race that wasn't


The EU's €3.3 billion from the research budget is dwarfed by funding from EU governments which could be as much as €30 billion.

Europe's struggles to secure proper funding for chips give the lie to its geopolitical posturing and efforts to restore chip production. The U.S. CHIPS Act became law in August and the U.S. federal government has far more power over how it can spend its $52 billion budget.

The real race now is how well regions can pull in new investments for "mega fabs" from three key manufacturers of chips: Taiwan's TSMC, South Korea's Samsung and the U.S.'s Intel.

Europe has secured €17 billion from Intel for a German plant and a reported €5.7 billion from smaller manufacturers STMicroelectronics and GlobalFoundries in France. The U.S. has been much more successful. Just last week, Bloomberg reported that Taiwan's TSMC — the industry leader — was laying the groundwork for a second U.S. factory in Arizona, next to its first.

China is on course to invest $150 billion in chips between 2015 and 2025


China is on course to invest $150 billion in chips between 2015 and 2025, the Commission estimated last year. South Korea is working with industry players to unlock $450 billion of private funding by 2030.

The Chips for Europe Initiative's €11 billion focused on commercializing research "would still punch below its weight" even if it all materializes, said Zach Meyers, a senior research fellow at London-based think tank Centre for European Reform. Meyers estimates that the U.S.'s chips strategy promises $13.2 billion in research.

Even that small bet has the potential to hit a jackpot.

"If we look at how the U.S. uses chips as a geopolitical tool, it's all about the [intellectual property], the IP rights for technology," Poitiers said.

"The objective should be to develop some technologies that no one else has. For developing these technological advantages, we need to invest in research," he said.

Newsletter

Related Articles

TIMES.KY
Close
0:00
0:00
Home Secretary Suella Braverman tours potential migrant housing in Rwanda as asylum deal remains mired in legal challenges
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
Credit Suisse to borrow $54 billion from Swiss central bank
Russian Hackers Preparing New Cyber Assault Against Ukraine
Jeremy Hunt insists his Budget will get young parents and over-50s back into work
If this was in Tehran, Moscow or Hong Kong
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
Mexican President Claims Mexico is Safer than the U.S.
A brief banking situation report
Lady bites police officer and gets instantly reaction
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
BBC Director General, Tim Davie, has apologized, but not resigned, yet, following the disruption of sports programmes over the weekend
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
Senator Tom Cotton: If the Mexican Government Won’t Stop Cartels from Killing Americans, Then U.S. Government Should
Banking regulators close SVB, the largest bank failure since the financial crisis
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Is Gold the Ultimate Safe Haven Asset in Times of Uncertainty?
Spain officials quit over trains that were too wide for tunnels...
Don Lemon, a CNN anchor, has provided a list of five areas that he believes the black community needs to address.
Hello. Here is our news digest from London.
Corruption and Influence Buying Uncovered in International Mainstream Media: Investigation Reveals Growing Disinformation Mercenaries
Givenchy Store in New York Robbed of $50,000 in Merchandise
European MP Clare Daly condemns US attack on Nord Stream
Former U.S. President Carter will spend his remaining time at home and receive hospice care instead of medication
Tucker Carlson called Trump a 'demonic force'
US Joins 15 NATO Nations in Largest Space Data Collection Initiative in History
White House: No ETs over the United States
U.S. Jet Shoots Down Flying Object Over Canada
Being a Tiktoker might be expensive…
SpaceX, the private space exploration company, made a significant breakthrough in their mission to reach space.
China's top tech firms, including Alibaba, Tencent, Baidu, NetEase, and JD.com, are developing their own versions of Open AI's AI-powered chatbot, ChatGPT
This shocking picture, showing how terrible is the results of the earthquake in Turkey
President Joe Biden delivered the 2023 State of the Union Address , in order to help Americans that missed the 2022 speech, do not have internet, and suffer from short memory.
The desk of King Carlos Alberto of Sardinia has many secret compartments
Today's news from Britain - 9th February 2023
The five largest oil companies in the West generated combined profits of nearly $200 billion in 2022, which has led to increased calls for governments to impose tougher windfall taxes
2 earthquakes in Turkey killed over 2,300 people
Powerful Earthquake Strikes Turkey and Syria, Killing More Than 1,300 People.
Turkish photographer Ugur Gallenkus portrays two different worlds within a single image. Brilliant work
×