Chip availability for all uses as the key to Europe’s tech sovereignty

What impact could the current semiconductor shortage have on Europe’s efforts to achieve both a digital and green transition? Alvaro Vilas, APPLiA Digital and Competitiveness Officer discussed the possible solutions to the crisis at the European Forum for Manufacturing webinar.

What impact could the current semiconductor shortage have on Europe’s efforts to achieve both a digital and green transition? The answer is simple, the home appliance industry needs chips and such technologies for the manufacturing of its products. Without chips, the manufacturing process and the supply chain of home appliances could stagnate at an unprecedented rate. According to the latest APPLiA Statistical Report, “the number of users of smart appliances expected by 2024 will equal the population of Australia,” highlighted Vilas. With an ever-increasing demand for home appliances comes the challenge of supplying European consumers with the most sustainable, energy-efficient products. Today, accounting for only 10% of the market share in global semiconductors, European companies have already been negatively impacted by the impending shortage, facing alterations in the production processes, supply chains and after-sales services. Moving forward, to reach the set goal of having 20% of the global market share of chips production, Europe must invest in all kinds of chips. This would lay the foundations for more balanced interdependencies, in the efforts to establish Europe as a key player in the entire global value chain.

Developing Europe’s technological sovereignty in the area of semiconductor technologies and applications must involve securing chip availability for all uses as a non-negotiable. In this regard, the implementation of a successful EU Chips Act is twofold.

Firstly, “Europe must ensure investment in ‘less sophisticated’ and more widely used technologies, to avoid a State Aid race for such technologies which would risk triggering a fragmentation of the Single Market,” declared Vilas. Put simply, while fostering the development of the latest semiconductor technologies of 2mm, Europe must also produce less developed chip designs ranging up to 50 mm, ensuring the manufacturing processes of all products are included. Ultimately, establishing a level-playing field for all sectors relies on their use. 

Secondly, the Act must “guarantee shorter administrative procedures in the crisis response mechanism,” Vilas stated. In this regard, the home appliance sector calls for investment to be channelled as soon as possible from the IPCEI. The IPCEI was introduced by the European Commission as a State aid criterion for Member States to allow public co-financing for large integrated cross-border projects to combat market failures and help European manufacturers meet the growing demands caused by the semiconductor shortages. 

Overall, it’s clear that chips are fundamental to the smooth functioning of Europe’s manufacturing processes. The present shortages of semiconductors threaten to severely destabilise Europe. To square the circle of technological sovereignty and EU competitiveness, we must act now through investment in all chips.