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Europe should invest in chip design, not a mega-fab: think tank By Reuters

© Reuters. FILE PHOTO: EU Commission presser on 2030 Digital Compass in Brussels

By Douglas Busvine

BERLIN (Reuters) – Europe’s ambition to take advantage of highly effective pc chips dangers losing billions of euros, a German think tank mentioned in a report on Thursday, urging coverage makers to focus as an alternative on rebuilding the area’s chip design business.

The EU govt’s new objective of doubling its international semiconductor share by 2030 is doomed to fail as a result of the bloc lacks a significant market that any super-advanced chip foundry might promote into, creator Jan-Peter Kleinhans mentioned.

“For an EU foundry there is simply no business case at the moment in Europe, mainly for the lack of customers,” mentioned Kleinhans, an analyst on the Stiftung Neue Verantwortung (SNV) think tank in Berlin.

The European Commission final month launched a 10-year plan, the Digital Compass, setting its sights on a 20% international semiconductor market share and constructing a fabrication plant, or fab, that may make superfast 2 nanometer chips.

The push has gained urgency as a result of supply-chain dislocations brought on by a sharp restoration in demand for merchandise starting from smartphones to electrical automobiles following a hunch on the onset of the coronavirus pandemic a 12 months in the past.

The downside with the EU’s technique is that, in contrast to the United States and Asia, Europe lacks a significant chip design business that would justify the price of a mega-fab, Kleinhans informed Reuters in an interview.

“In terms of volume it’s simply not enough to fill a fab,” he mentioned. “That would mean an EU foundry would need to attract foreign customers – this is extremely unlikely.”

Industry leaders TSMC and Samsung (KS:) already plan investments in the United States to serve chip design leaders like Qualcomm (NASDAQ:) or Nvidia (NASDAQ:) that depend on contract producers to supply their chips.

Plans by Intel (NASDAQ:) to launch its personal foundry service, or contract manufacturing operation, beginning in the United States, would add to capability and lift questions concerning the economics of increasing manufacturing in Europe, mentioned Kleinhans.

Europe should as an alternative concentrate on reviving its vestigial chip design business, he mentioned. Of its final two publicly listed “fabless” chipmakers one, Dialog, has simply agreed to be purchased for $6 billion by Japan’s Renesas.

Apple (NASDAQ:)’s announcement that it’s going to invest 1 billion euros ($1.2 billion) in a new chip design facility in Munich, Germany, exhibits the place the EU should be focusing its efforts.

“Apple has single-handedly done more for European-based chip design than the Commission in the past 10 years,” mentioned Kleinhans.

($1 = 0.8430 euros)

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