Shortages and trade tensions call for EU strategic semiconductors autonomy

The European Commission has announced the kick-start of two new industrial alliances to further develop its chipmaking production capacity and cutting-edge tech. The need for fast and efficient processing of data caused a sharp rise in demand for semiconductors, and a subsequent shortage due to production capacity no being scaled up accordingly. Recently published data of the eurozone industrial output has exposed its severe vulnerability to semiconductors supply disruptions, with most European carmakers having to slash their vehicle production forecast. Also, ensuring a stable chip supply is paramount for the ambitious EU plans to set the ground for the next generation technology as well as culminating its green deal. In fact, the EU commission will devote $950bn in its NextGen fund to help enterprises aligned with these objectives recover from the immediate damage caused by the pandemic crisis, as well as develop new projects to help the EU move forward in the right direction.

Building new chipmaking factories may be the initial step for the EU to increase capacity, and it looks like the US chipmaker Intel has shown its desire to build a European manufacturing ecosystem, which would entail building dedicated plants to manufacturing, packaging and R&D in different locations across the continent. Although the current European Commission is all about cutting-edge technology that will shape the future while reducing the overall impact of its economy on the environment, it should prioritize the chipmaking for the automotive and electronic sectors.

Nevertheless, the determination shown by the European Commission to devote resources to develop and manufacture cutting-edge chips, is coherent with its longstanding fight to regain sovereignty of data and compete with US big tech. Although it may be too late to provoke a shake-up that would turn European champions into global tech leaders, it would certainly be sensible to fully support the tech innovation by continental tech groups. Therefore, promoting the competitiveness of regional tech would increase the control of the EC over the management of data and ensuring the compliance with privacy policy.

Regardless of the path that the EU ends up following in terms of what type of semiconductors priorities manufacturing, reducing its reliance on American tech companies as well as Asian chipmakers would be good news. Not only the EU is suffering the collateral damage of US-China trade battle, but it has had its own commercial and diplomatic scuffles with both economic mammoths. Also, regaining independence and sovereignty of its own technology and data would protect the EU more from potential cybersecurity and privacy issues as global digitalization goes on.