The EU's ambitious goals of locating modern semiconductor production meet the harsh reality: the pace is slow and the budget has effectively shrunk. After Intel has already raised its hooves this week because the construction in Magdeburg is supposed to increase in price from 17 to 30 billion euros, TSMC could reject it entirely.
Demand vs. Reality
Companies usually have the new settlement sweetened by the state, 30 to 40 percent subsidies from public funds are not uncommon. For the largest companies in the semiconductor industry, such as Intel and TSMC, this is usually not enough, since many countries recently opened their coffers and it was not uncommon for even 50 percent of the required funds to be provided by the public purse. This also ensured that things got going quickly after the decision on a location had been made. An example is the TSMC Sony project in Japan, which was built quickly and even upgraded in the meantime.
In the EU, things are also progressing more slowly within the framework of the EU Chips Act, and inflation with downright exploding costs in many potential areas is clearly playing against a location on European soil. In the end, the sum of around 43 billion euros planned for the EU Chips Act is hardly worth half, as the example of Intel shows: In the meantime, twice as much public money is to be contributed here – because the costs have risen and because Intel is in of the negotiating position. Either the fund will be increased, or its possibilities will be de facto halved.
The EU Chips Act will not be implementable without more money
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Once again, it should be countries in Asia that want to use better packages to control the location issue for companies in their favor. The latest media reports once again mention Singapore. The country is said to want to put together extremely good financing packages in order to attract even more semiconductor industry to the small city-state. As always, TSMC is diplomatic and explains that no location in the world is excluded from the outset, but that nothing has been decided yet. However, an expansion in Japan currently has the best cards – it is running here thanks to subsidies. Europe is still being evaluated, this procedure has been going on for years and will not end any time soon according to the latest reports.
Things are unlikely to get any easier in the coming months and, unless the EU moves, the EU Chips Act will dry up like a storm in a teacup. The region can then definitely say goodbye to the planned significant market shares in high-end chip production. Even the targets defined a year ago of a 20 percent share in global semiconductor production by 2030 have moved a long way off for the time being.
CB radio podcast episode #10: “More appearances than reality” applies far too common for hardware too