Europe wants to become more independent of China and the USA in the production of microelectronics and chips. Now the EU has approved an enormous subsidy program – German companies are also benefiting from this.
In order to become less dependent on the USA and China for the development of microelectronics and chips, the EU Commission has approved a multi-billion dollar subsidy program. According to EU Competition Commissioner Margrethe Vestager, this should make dozens of projects possible.
Vestager called microchips “the backbone of the economy”. Europe must increase its own capabilities here. We have to be pioneers,” she explained.
In order for this to succeed, the EU Commission has approved aid of 8.1 billion euros as part of the so-called “Important Projects of Common European Interest” – IPCEI for short. In addition, private companies invested up to 13.7 billion euros, so that the total investment was around 21.8 billion euros.
In addition to Germany, 13 other EU countries are taking part in the project – including France, Austria, the Netherlands and Spain.
German projects and partners benefit
Many of the projects and partners that benefit from the program are located in Germany: 31 semiconductor projects in 11 federal states are involved in this country.
The number is not directly comparable with the 68 projects across Europe that the EU Commission is talking about – the Ministry is talking about around 100 projects across Europe. This is due to different counting methods, the ministry explained. While the EU Commission lists legal entities, the Ministry of Economic Affairs counts different projects from companies such as Bosch or Infineon individually. According to the EU Commission’s counting method, there are 23 funding projects for Germany.
The Federal Ministry of Economics explained the financing: “In total, German companies invest more than ten billion euros, among other things in innovative production systems, manufacturing facilities and for the development of semiconductor chips. They are to be funded with a total of around four billion euros, of which 70 percent by the federal government and 30 percent by the states to be provided.”
Many projects in Bavaria and Saxony
In addition to large companies, small and medium-sized companies and start-ups are also involved in Germany. According to an overview by the Economics Ministry, there are many projects in Bavaria and Saxony.
Funded companies will therefore include Infineon with locations in Bavaria, Saxony and North Rhine-Westphalia and Bosch with locations in Baden-Württemberg and Dresden. The projects range from material production and chip design to the creation of new products and applications.
Habeck speaks of a milestone
Federal Minister of Economics Robert Habeck (Greens) thanked the EU Commission for the decision. The projects strengthened Germany as a microelectronics location and were an important industrial policy milestone, he explained in Berlin.
In this way we can increase resilience across Europe in this important field and secure value creation and jobs.
According to the BMWK, the investment program aims to catch up in microelectronics and communication technologies, especially where Europe has become technologically dependent on third countries. At the same time, the national projects would create more than 4,000 direct new jobs.
According to the Economics Ministry, the promotion of microelectronics should contribute to the emergence of modern chip factories in Germany and the development of more powerful components.
Second major EU offensive in the area
With government support and other measures, the EU wants to double its global market share in the semiconductor sector to 20 percent. However, experts point out that comparable subsidies in China and the USA are even more aggressive. Also in Taiwan, South Korea and Japan, the industry is highly courted.
It is already the second major microelectronics offensive by the EU, which approved a similar program in 2018. At that time, according to EU Commissioner Vestager, a chip factory from Bosch in Dresden and Carl Zeiss in Baden-Württemberg had benefited. The EU Commission must approve important national funding projects so that there is no distortion of competition between the EU countries.