According to SNV, Europe should invest in the development, not in the production of microcircuits

Europe’s quest to master advanced chip manufacturing could result in the loss of billions of euros. This assessment is contained in the report of the German think tank Stiftung Neue Verantwortung (SNV). Analysts are urging instead of manufacturing to focus on rebuilding the region’s chip design industry.

The author of the report, Jan-Peter Kleinhans, believes that the new goal of the EU leadership to double the region’s share in global semiconductor production by 2030 is doomed to failure, because the block does not have a significant market for these products.

The European Commission last month launched a 10-year plan called the Digital Compass. The plan provides for the construction of a factory capable of producing 2nm microcircuits and capture of 20% of the world semiconductor manufacturing market.

The plan has grown in relevance amid a shortage of semiconductor products caused by a sharp rebound in demand for microelectronic products after the pandemic-related recession that began about a year ago. However, a weakness in the EU’s strategy, Kleinhans said, is that, unlike the US and Asia, Europe lacks a significant chip design industry to justify the costs of setting up a mega-factory.

“The available volume is simply not enough to load the factory,” the analyst is sure. “This would mean that an enterprise in the EU will need to attract foreign customers, which is highly unlikely.”

Industry leaders TSMC and Samsung are already planning investments in the United States to serve chip leaders like Qualcomm or Nvidia, who rely on contract manufacturers for their products. The situation for the EU does not simplify and Intel’s decision to more actively engage in contract manufacturing of semiconductor products.

Instead, Europe should focus on reviving its own chip development industry, which is almost extinct and snapped up by foreign companies, the analyst said.