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The European Commission (EC) has announced €43 billion in funding to build new plants to make advanced computer chips that will power next-generation smartphones, appliances, and electric vehicles.
The move aligns with our “Top 2022 Trend” of households, businesses, and nations moving toward economic self-sufficiency.
The COVID War “painfully exposed the vulnerability” of Europe’s chip supply chain, EC president Ursula von der Leyen said in announcing the allotment.
Under the plan, the EC and national governments will spend €11 billion to build three chip factories that any company could use.
Then, by 2030, businesses and national governments would be obligated to invest an additional €32 billion.
The proposal also alters EC rules to allow government subsidies for companies building and operating the plants and requires companies to prioritize European customers in the event of another chip shortage.
The scramble to secure the EC’s new plants has sparked concerns of a “race to the bottom” as countries offer tax breaks and other incentives to lure manufacturers.
However, EC rules governing competition allow for customized approaches in special cases, Margarethe Vestager, EC commissioner for competition, said in comments quoted by the Financial Times.
Big semiconductor plants are pricey and “would not exist in Europe if we did not do something,” she said.
U.S. chip colossus Intel already has announced a $20-billion plan to build two factories in Germany, with research labs and support services targeted to France, Italy, or the Netherlands.
In the U.S., the Biden administration has proposed a $52-billion outlay to subsidize strengthening and expanding the domestic chip industry; other governments also are following suit.
TRENDPOST: Europe’s plan reflects our “Top 2022 Trend” of countries moving aggressively to develop “Self-Sufficient economies” in the wake of the lingering supply-chain chaos created by the COVID crisis.
Global vulnerabilities will continue for months; the supply chain snarl will last at least through this year, according to the World Trade Organization, as we reported in “Supply Chain Snarls Will Last Longer Than Expected, WTO Head Says” (8 Feb 2022). These supply-line kinks make it more urgent than ever for nations to become self-sufficient in key supplies and materials.
TREND FORECAST: Households, companies, and nations will continue to shift their behavior from “just in time”—keeping minimal supplies on hand and being ready to buy more as the need arises—to “just in case,” stockpiling essentials to prepare for the next virus or government-ordered lockdown.