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Europe stands up to China and launches a millionaire plan for the production of microchips

The European Commission published on Tuesday its strategy so that the old continent is autonomous in the manufacture of chips and microchips and does not depend on third countries to keep its factories running and produce its cell phones, cars, medical equipment or any other product. moderately advanced industry.

The exit of the pandemic caused bottlenecks in the global supply of microchips and Europe realized that it was importing practically all the ones it needed.

Now it is trying to change that situation by attracting manufacturers to the European continent with a plan that will mobilize 17,000 million European funds and that will reach 47,000 million euros if the part that the 27 governments of the bloc will contribute is taken into account.

Europe knows that Taiwan produces 50% of all semiconductors on the planet, essential components in any digital device, and 95% of the most advanced. Taiwan is a reliable trading partner for Europe, but it is also an unrepentant target of a China that is showing more and more teeth.

The chips, essential for the operation of cars, cell phones or medical equipment. Photo: REUTERS

The conflict between China and Taiwan

Europeans fear that if China ever decides to invade and conquer Taiwan, will be the owner of the world key to semiconductors, a weapon with which he could bring the European economy to its knees. The medium-term solution is to make Europe produce at least 20% of all the chips on the planet.

The lack of semiconductors has meant that key European industries for economic activity and employment on the continent, such as the automotive industry or electronic devices in general, have months producing well below capacity because they don’t have enough semiconductors.

Brussels recognizes that this proposal will not solve current problems but hopes that it will prevent similar problems in the future. The plan must be completed by 2030 at the latest and by that year European production of semiconductors must equal 20% of world production.

The plan

The initiative, which became known under the English name of “European Chips Act”, starts by forming a working group in which officials from the European Commission, the Member States and the industry involved will participate.

That group will study how that semiconductor market is developing as a first step to identify what causes supply bottlenecks.

The European Commission will have tools such as those of control European exports of semiconductors as was done with the production of vaccines against the coronavirus.

The Brussels plan means the greatest mobilization of public funds to push a particular economic sector only behind the subsidies received by the bloc’s agriculture.

The president of the European Commission, Ursula von der Leyen, this Tuesday at the presentation of the chip production plan, in Brussels.  Photo.  REUTERS

The president of the European Commission, Ursula von der Leyen, this Tuesday at the presentation of the chip production plan, in Brussels. Photo. REUTERS

The EU will mobilize, from its “Horizon” research program, 12,000 million euros, which will rise to a maximum of 17,000 million if the 5,000 million that the European Investment Bank will put into account is taken into account. To that we must add 30,000 million in national funds. Only Germany has already promised its industries 10,000 million.

Companies that start using technologies hitherto unavailable in Europe will be subsidized.

European countries with significant semiconductor industries, such as Germany, Belgium, France and Italy, would be the most favored by this mobilization of funds, but the European Commission assures that it will benefit the entire bloc because it will facilitate the availability of semiconductors.

Europe recognizes that there may be a perverse effect with this aid, which the United States and China have also announced.

As in the steel sector, overproduction can be generated and prices fall such that it damages private investment in the sector. But the risk of falling behind in the race and depending on others as before weighs more.

Úrsula Von der Leyen, president of the European Commission, said on Tuesday that this initiative will improve “the global competitiveness of the European single market. In the short term it will increase our resistance to future crises. In the medium term, it will help make Europe an industrial leader in this strategic branch.”

The European Commissioner for the Internal Market, Frenchman Thierry Breton, said for his part that “without semiconductors there will be no digital transition, there will be no ecological transition, there will be no technological leadership. Securing the supply of the most advanced semiconductors has become an economic and geopolitical priority.”

The pandemic and its output in the form of strong economic demand caused Europe to see itself naked in many sectors. Brussels tries to cover itself and be able to compete with China and the United States so that its economy remains the first in the world.

Brussels, special

CB

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