02 May, 2024
In this op-ed, Martijn van Gruijthuijsen, Vice-Governor for Economic Affairs, Finance, Knowledge and Talent Development for the Dutch province of Noord-Brabant, Renew Europe member in the European Committee of the Regions (CoR) and shadow rapporteur on the EU Chips Act, discusses the future of the semi-conductor industry on the continent.
Semiconductors have become vital for every industry. With the EU Chips Act, the European Union is treating it as such. Due to current economic and geopolitical realities, Europe must ensure its strategic autonomy, while remaining an open economy and cultivating innovation.
The semiconductor sector has been embroiled in turmoil recently. Global supply chains are still impacted by the COVID-19 pandemic, the war in Ukraine is wreaking havoc on the supply and cost of raw materials and new sanctions by the USA are directly hitting the semiconductor industry with export limitations to China, which has severe economic effects.
With all this turmoil, Europe cannot remain on the side-lines. With the current economic and geopolitical realities being as they are, the EU Chips Act is an important piece of legislation and is vital to the EU’s future as an innovative and autonomous economic powerhouse. On 12 October, the European Committee of the Regions (CoR) voted on an opinion concerning the EU Chips Act.
Semiconductors are crucial components in a wide range of technological products, from computers, smartphones and household appliances to cars, medical devices, and wind turbines. Chips make the world go round, and are essential for energy, medicine, transport, agriculture, and the environment. On this front, Europe is sorely falling behind in manufacturing: only around 10% of global semiconductor production comes from Europe.
Recent events have shown us that this vulnerability is a serious threat for European economies. Semiconductors saw some of the largest shortage due to the COVID-19 pandemic, since most chips are manufactured in Asia.
Global supply chains still haven’t fully recovered, and the demand for chips continues to rise dramatically: the sector expects demand double by 2030. The shock this is causing to the system causes delays, price hikes and inflation. And let’s not forget that current geopolitical events in Europe and Asia have shown that Europe needs to decrease its economic dependency.
Considering current global value chains, if Taiwan would become unable to produce and export semiconductors, we would see a supply shock which would disrupt nearly every industry. In other words: it is about time Europe stands on its own two feet and takes production of essential products on its home soil seriously. The EU Chips Act does this and provides highly sensitive strategic input into EU industry as a whole.
