The EU strategy to guarantee its own supply of micropuces is “deeply disconnected from reality”, revealed an overwhelming report from the Court of European Auditors (ECA).
The ECA reported that the block was “very unlikely” to meet its 2030 objective to provide 20% of the world’s microchips at a time when global demand for semiconductors is booming to meet the growing needs of defense, green technology and artificial intelligence.
Donald Trump threatening to impose rates on fleas imported in the United States, there is also a potential for “the collapse of supply chains,” said CEA, making the EU more vulnerable, despite technological multinationals such as the Intels in California and Samsung in South Korea with the basis in Europe.
“The EU needs a reality control in its strategy for the micropile sector,” said Annemie Turtelboom, who was in charge of the ECA audit.
A document from the European Commission in 2022 has set out the ambition of the block to take a share of 20% of the flea market, an action reflecting the percentage of global end users located in Europe.
However, the CEA report revealed that Target was “essentially ambitious” and that the investment objectives were hampered by the “financial muscle” of the block being too fragmented in different diets and tax regimes.
“We make deeply disconnected promises of reality,” Turtelboom told journalists when the report is launched.
“We compete in a world race, but in the back of the field, and it is not clear if we have the means to succeed in this race (or the) skills to support the industry, and the funding we have is fragmented and dispersed.”
Highlight shortages can cause enormous industry problems. The report noted that in the wake of the pandemic, a lack of microchips for German car manufacturers caused a collapse of production at the 1975 levels.
“They are present in everything and only become even more than over time,” said Turtelboom. “In a modern car, there are about 1,500 micropuits. By 2030, this number should reach 3,000. “
Brussels announced a flea law in 2022 to reduce EU’s dependence on foreign states for the supplies of critical components. The resulting regulations came into force in 2023.
“Is that worrying? We know that other continents, China, the United States, Taiwan and South Korea, they are not motionless,” added Turtelboom.
China should exceed Taiwan as the largest world manufacturer in flea in 2030 with 22% of the market, according to the ECA. The EU should manufacture only 8% on its own soil, and should quadruple its production capacity to reach a target of 20%.
ECA noted that the flea law had provided a “new momentum” to manufacturing and that the funding provided by the European Commission was aligned with the block strategy.
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However, he said that the law was “prepared in an emergency” and that the Commission had no mandate to coordinate national investments and all financing flows. He added that tax alternatives should be closely monitored for the increase in investments.
EU’s ambition when the flea law entered was to mobilize 86 billion euros (73 billion pounds sterling) in investment by 2030, but this is overshadowed by the sums spent by people like the Taiwan Semiconductor Manufacturing Company (TSMC), Samsung and Intel.
These best players have planned $ 425 billion (361 billion pounds sterling) for an investment in just three years between 2020 and 2023 and only one, TSMC, had important plans to invest in the EU.
Intel, which already has manufacturing facilities in Ireland, had planned to pay 30 billion euros in a mega factory in Magdeburg, Germany, with support of nearly 10 billion euros from the German government, but postponed construction last September.
The postponement was a hard blow for the EU which highlighted the effects of the concentrated sector in so few hands.
“There are a limited number of players who receive a lot of funding, which means that if a project drops, this has a huge impact on the 20%objectives,” said Turtleboom.
A spokesperson for the European Commission said that the flea law had catalyzed the funding of 80 billion euros and “threw a solid base in the consolidation of the position of Europe on the world market of semiconductors after two decades of decline and put Europe back on the path of growth”.