Affected by the US-China trade war, global political situation, protectionism, and the epidemic, the global semiconductor supply chain have gradually changed to a short chain, focusing on local production and local supply. The semiconductor industry is viewed as a global ecosystem of thousands of companies, not just a collection of a few large fabs.
Although Europe plays a key role in the global semiconductor supply chain for key semiconductor equipment, wafer raw materials, and advanced IP design. In the past, the establishment of the overall semiconductor industry chain was ignored, and the integration was insufficient, resulting in a low chip self-sufficiency rate.
The European Union launched the Chips Act, which aims to double Europe's global chip market share to 20% by 2020. Nearly 10 years later, the EU chip market share is still around 10%. Taking this a step further, Europe no longer produces the most advanced chips used in data centers or smartphones. The European Union has decided to adjust amid a global shortage of chips and industries that are increasingly relying on them.
The EU formally proposes the "Chips Act" in 2022. According to the "Chip Act", the government and the private sector will invest more than 43 billion euros in the development of the chip industry, which is like the investment budget for the chip industry passed by the US Congress. More than two-thirds of this money will be in the form of state grants to encourage manufacturers to build new cutting-edge wafer factories or mega fabs, and the rest will be poured into infrastructure related to chip manufacturing. It is expected to double the global market share of European chips and ensure the security of the European chip supply.
The R&D process in the semiconductor industry is long, often several years and billions of dollars in investment. The new chips are designed by manufacturers who specialize in designing chips with complex software that is made by other companies. After the wafer is fabricated, it is handed over to a contracted manufacturer for assembly testing (ATP). From an ecosystem perspective, the European Union remains a leader in semiconductor research and development, and European companies are responsible for the production of many of the important equipment needed for fabs.
Half of the EU's wafer production capacity is made of wafers above 180nm, although it lags the current state-of-the-art wafers. But advanced chips made by TSMC and Samsung are mostly used in consumer electronics, most of which are assembled in Asia. Conversely, the wafers produced by European fabs are sufficient to supply many local manufacturers and can be used in automobiles, machinery, and sensors. European chip fabs also have a business-focused customer base.
The EU seeks to build a healthy industry ecosystem with semiconductor companies such as Taiwan. The industry should think from the perspective of the overall European industry development and seize the opportunity for layout. The EU hopes to attract more investment to join the ranks of European chip production, one is the chip production organization in the one-stop manufacturing of brand owners, and the other is the foundry factory; if the qualified chip production organization can be selected, it will be beneficial to European countries set up factories to invest and get various preferential treatment.
The EU itself has a robust automotive and sensor industry. At present, there are three main types of end-user markets in the EU; one is the computing industry based on cloud data computing centers, the other is the communication and network infrastructure industry including the Internet of Things, and electronic power applications, and automobiles, etc. industry. Before Taiwan's semiconductor industry considers entering the European market and enjoying relevant preferential subsidies, the industry must think from the perspective of the development of the overall European industry to win among all competitors.
