The Booming Semiconductor Industry

Evolving regulation in the EU and US is promising, and Europe's healthy academic field means it is well placed to power its digital advances with homemade microchips

FREMONT, CA: Europe is undoubtedly on the cusp of a transformation that will shape its future. This shift is being driven by technology. Achieving Europe's digitisation potential will depend on technologies like artificial intelligence, ubiquitous computing, cloud-to-edge infrastructure, and pervasive computing. A semiconductor chip serves as the foundation of these technologies. Creating awareness of the world is accelerated by the technology that powers new ideas and technology. The resuscitation of the semiconductor industry, which was decimated by global shutdowns, shipping difficulties, and geopolitical tensions, is intertwined with Europe's digital transformation. Different ways to build a next-gen semiconductor industry.

In future, Europe must reinvigorate its semiconductor industry. Although it is crucial, solving this problem is not simple. By 2030, the EU wants to expand its market share from nine per cent to 30 per cent of the global semiconductor market. Here are crucial actions the bloc can do right away to achieve that challenging objective:

1. Double down on collaboration

The significance of collaboration cannot be emphasised because no one government or group can reform a global sector alone. Open ecosystems and strong partner ties are needed to advance Europe's semiconductor sector.

The cost of producing semiconductors in Europe, however, is far higher. Operating a semiconductor fabrication facility, or fab, can be 40 per cent to 50 per cent more expensive in Europe than in other regions where governments may support manufacturing. Similar subsidies across Europe would undoubtedly contribute to levelling the playing field.

The EU Chips Act is evolving, which is important news. Additionally, there is a need to foster cooperation among all actors throughout the value chain in Europe, especially those firms that might be too small to conduct business internationally. Businesses should take a closer look outside of Europe and the EMEA region and within it. The U.S. CHIPS and Science Act, which will bolster the domestic semiconductor industry, was recently passed, and it is a welcome move in the right direction. More importantly, it demonstrates cross-Atlantic cooperation.

2. Bring the lab and the fab together

Historically, one of Europe’s key strengths has been laboratory research and academia, but production has taken place at semiconductor fabrication plants elsewhere. Businesses must aim to bring research and manufacturing closer together. Harnessing some of the world’s greatest talent in Europe can translate the region’s existing excellence in research into industrial innovation for consumers globally. Kearney estimates that the overall European economy would experience between USD 77 billion and USD 85 billion in additional GDP over the next decade through chip investment alone.

The first step in making this a reality is legislation. The EU Chips Act, which is currently going through the legislative process of the EU, aims to mobilise more than USD 43 billion of public and private investments to give manufacturers the resources they need to prosper in Europe, including investments in R&D, the creation of talent pipelines, and supporting infrastructure.