The support package for European chip makers won’t be enough to reach the European Union’s goal, according to NXP’s CEO. The chip giant calculated that the market needs €500 billion in investments, while the support package only provides €43 billion.

The European Union wants to have a 20 percent share of the global market for chip production by 2030. To achieve that goal, Brussels introduced the EU Chips Act, a €43 billion package of subsidies and tax breaks for European chip makers.

Kurt Sievers, the CEO of NXP Semiconductors, argues that the amount is far too low. “We have calculated that we would need €500 billion investment in Europe to reach the 20 percent market share goal formulated in the EU Chips Act”, the CEO said during a presentation at a conference for chipmakers held in Germany.

NXP Semiconductors

NXP is one of the world’s largest chip manufacturers. The company was founded in the Netherlands and listed in the United States. Its market value currently sits at $40 billion. The company employs more than 30,000 people.

NXP knows what a company needs to expand its production capacity. “Reaching 20 percent world market share coming from 10 percent requires tripling or quadrupling our capacities”, Sievers explained. According to the CEO, the EU Chips Act’s €43 billion euros is far from enough.

EU Chips Act meets criticism

Chip manufacturers can use the EU Chips Act to apply for subsidies for new factories and expansions. One of the manufacturers is Intel, which is leveraging the support package to build a multibillion-euro plant in Magdeburg, Germany.

Intel’s plans were met with criticism of the EU Chips Act. “Neither the Commission nor Intel have so far been able to tell us how much public money will flow into their new projects”, MEP Tiemo Wölken told Politico in March 2022.

Wölken urged the European Commission to provide more transparency on the support package. Other parties are critical of the amount made available. Gartner VP Richard Gordon recently emphasized that chipmakers need sky-high budgets to expand their production capacity.

“$52 billion is a drop in the bucket compared with what the semiconductor companies like Samsung and Intel are themselves planning to invest over the next decade”, Gordon said about the US Chips Act, the American equivalent of the EU Chips Act. “It’s hundreds of billions. I don’t think people realize how much investment chip fabrication requires.”

Tip: European Chips Act unveiled: where will the 43 billion euros go?