Interest group ESIA suggests that Europe should not compete to make advanced chips on its own continent. Instead, the group, whose members include NXP, Nexperia, GlobalFoundries, and Intel, wants to emphasize semiconductors on legacy, familiar processes. This is perhaps the curtain call for an EU pipe dream.
The focus on legacy chip production is already the “strength” of European chip manufacturing. New projects such as the ESMC joint venture (of TSMC, Bosch, Siemens and NXP) also focus on this area out of necessity. These involve products based on mature chip nodes long left behind by the bleeding edge. For example, whereas TSMC’s 28nm process produced the most advanced CPUs, GPUs and SoCs in 2011, this is now the domain of less complex chips. Companies like Apple and Nvidia already have four to five process reductions ahead at 3-4 nanometers.
ESIA vision
The ESIA is now reacting positively to Henna Virkkunen’s appointment as EU Commissioner-designate for the chip industry. The European Semiconductor Industry Association (ESIA) is an interest group with virtually all major European chip players as members and some outside Europe.
According to this group, the EU’s “Chips Act 2.0” should emphasize mature processes such as 28nm for legacy chips. Virkkunen wants that as well. Both emphasize the need to provide the automotive and industrial sectors with chips that are far from advanced.
Back to original intent
In truth, Virkkunen and the ESIA are pleading for a return to the original intent behind the EU Chips Act. The bill slowly morphed from a COVID-driven call for a basic chip supply guarantee to one harbouring ambition to make Europe competitive with East Asia and the U.S. for the latest nodes. But since TSMC (Taiwan), Samsung (South Korea), and Intel (U.S.) are all non-European players, the path to this is very difficult to discern.
Therefore, the solution appears to be the choice for a specialization. It should be noted, however, that cars today are using on increasingly younger chip nodes, with a heavy reliance on TSMC’s Taiwanese factories. The Software-Driven Vehicle requires not just older legacy chips for basic functions but also full-fledged, modern processors that are economical, fast and widely deployable. With this strategy, Europe will probably never be autonomous in its chip industry supply chain. But this may well never have been possible.
Instead, the value chain is clear: players like imec and ASML play a key role in the global chip world from Europe. That is already a strong starting position, but the fact that these companies themselves are already barely confined to their country of origin already shows something else. The chip industry is globalized, Europe has a role to play in it, but it can never do it alone.