EU's microchip strategy "needs urgent reality check", says Court of Auditors
The EU "urgently needs a reality check" on its microchip strategy, according to the European Court of Auditors. Its target of controlling 20 per cent of the world's production of advanced microchips by 2030 is highly unlikely to be met, it said in a report published on Monday.
A shortage of microchips in the wake of the COVID-19 pandemic made the EU realise it was too dependent on other continents for the parts. In response, the European Commission introduced the European Chips Act in 2022. With an estimated investment of an estimated 86 billion euros, it hoped to increase the EU's share of advanced chip production to 20 per cent by the end of the decade.
"Meeting [the target] would require us to approximately quadruple our production capacity by 2030"
But three years later, that target already seems unachievable, a report by the European Court of Auditors states. “The EU urgently needs a reality check in its strategy for the microchips sector”, said Annemie Turtelboom, who was in charge of the audit.
"Meeting [the target] would require us to approximately quadruple our production capacity by 2030," the former Belgian minister writes. "But we are nowhere close to that with our current rate of progress."
Funding problems
For example, production in China and South Korea is growing much faster than in Europe. And while 86 billion euros may seem like a lot, it is dwarfed by the spending of the industry's top players, which budgeted more than 400 billion euros for the period 2020-2023 alone.
In addition, the Commission controls only 5 per cent of that 86 billion euros. The rest is expected to come from member states and industry. In addition, the funding is concentrated on a small number of projects, with the risk of large losses if investments fail, Turtelboom writes.
Europe's supply chain is also under pressure from a tense geopolitical environment, export restrictions and import tariffs. And, as in other industries, Europe is highly vulnerable in terms of access to raw materials, and struggles with high energy costs and a lack of skilled labour.
In a response to the report, a Commission spokesperson said the Chips Act has "laid a strong foundation in consolidating Europe’s position in the global semiconductor market after two decades of decline, and put Europe back on the path of growth."
PHOTO © Josep LAGO / AFP
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