Tobias Wölk, Product Manager Automation Technology & Active Components at reichelt elektronik, spoke about Europe’s key role in the production of the components of the future.
Let’s take a historical step back: the coronavirus crisis exposed the EU and U.S. dependence on Asian chipmakers. As demand for semiconductors exploded, production lines stopped, especially in the automotive industry. But today, chip production in Europe is to restart, and according to the European Chip Act, Europe’s share of semiconductor production is expected to increase to 20 percent by 2030.
The €43 billion European plan
“In terms of financial architecture, the European Chips Act will mobilize 43 billion euros in public and private investment, including 3.3 billion from the EU budget, and as of June 2023, funding has been approved for about 100 European projects,” saysTobias Wölk, Product Manager Automation Technology & Active Components, reichelt elektronik.
The manager stressed that Europe is only able to achieve true sovereignty in semiconductor manufacturing through a fully Europeanized value chain, from front-end to back-end manufacturing. “We need more manufacturing factories, but we also need regionalization of processing industries. Otherwise, we will continue to be vulnerable to disruptions in the global supply chain and our dependence on Asia will persist. A European semiconductor market can only be truly independent if all production steps are relocated to our Continent.”
Fragile supply chains
To save costs, many large semiconductor manufacturers have decided to outsource back-end manufacturing to service providers who specialize in the Asian market. These outsourced vendors are known as Outsourced Semiconductor Assembly and Test Vendors (OSATs) and perform this work on behalf of large semiconductor companies. Nine of the world’s ten largest OSAT suppliers are located in the Asia-Pacific region (six in Taiwan, three in China). The complex manufacturing process makes global semiconductor supply chains particularly fragile in the face of a product that, on the other hand, is critical and increasingly crucial. Therefore, the EU’s Chip Act plan to strengthen European semiconductor production is obvious.
Forecast
Simply relocating front-end production will not solve Europe’s dependence on semiconductors. “OSAT capacities must be increased to the same extent as front-end production. Otherwise, the localization of semiconductor production in Europe will remain incomplete and ineffective, as chips will still have to be sent abroad to be made ready for use,” Wölk explained.
There is also a lack of adequate manpower to achieve such ambitious goals. According to calculations by PwC Strategy, there could be a shortage of about 350,000 workers by 2030 to meet the EU’s ambitious 20 percent target.
“Another major bottleneck is the dependence on Chinese silicon production. Silicon, the most important raw material for microchips, is largely produced in China, a dependence that makes Europe vulnerable
