European digitisation depends on microchips. On the EU’s table, one of the necessary conditions for the transition into the age of digitalisation is the increasingly strategic availability of highly efficient, energy-efficient and high-performance microprocessors. Satisfying a market in crisis for microchips is not easy. In Europe, the shortage of components needed for production is now a priority, and the race to reduce dependence on foreign supplies has become an urgent necessity.

HOW MICROCHIPS ARE PRODUCED

Europe is paying for its dependence on Asia. In recent years, especially in the post-pandemic period and, recently, with the geopolitical uncertainties in certain areas of the Asian continent, the scarcity of microchip imports into the EU has worsened with evident economic and productive repercussions that have affected all 27 States.

The Old Continent, as mentioned, depends for the most part on Asian production, suffering a situation of radical dependence. The paradox is that the design of microchips takes place largely in Europe and America, while assembly, production and packaging are in the hands of Asian countries thanks to the better price-quality ratio.

Europe’s difficulties, the experts point out, are attributable to two factors: on the one hand, the lack of investment in chip development and production, and on the other, the failure to diversify suppliers and sources of supply, thus remaining locked in a perennial dependence on foreign countries.

THE MICROCHIP CRISIS IN EUROPE

The lack of chips and the increasingly pressing demand for components are having a devastating effect on European production sectors that make extensive use of chips. The difficulty of finding the right number of microchips on the market to meet current demand is forcing certain sectors such as the automotive industry or the production of agricultural and industrial machinery and equipment to scale down production and lengthen delivery times.

If the microprocessor crisis continues, some production lines may have to close down. Experts estimate that 5.1% of industrial production in Europe was lost in the first 10 months of the last year, with some sectors, such as automotive, among the hardest hit.

ACTIONS THAT THE EUROZONE CAN TAKE

In order to overcome these critical issues, which are heavily affecting the growth and competitiveness of the Eurozone, the EU Commission has recently proposed a clear reversal of the trend by drawing up an ambitious medium-to-long term plan to build its independence. The EU’s objectives for the coming years aim to develop chip technologies and production capacities, making them increasingly advanced and progressively reducing foreign dependence. Alongside these measures, the EU wants to increase its share of global investment in the sector by doubling its domestic production from the current 10% to 20%.

WHAT THE EUROPEAN CHIP ACT ENVISAGES

In order to increase the production of semiconductors, which are needed to manufacture microchips, and to attract investment from foreign companies, the European Commission is drawing up an investment plan that is expected to be around €50 billion. A figure that, by 2030, should ensure European independence from microchips.

The EU Commission’s aim is to bridge the gap with Taiwan, Korea and China – leaders in the semiconductor and microchip sector – especially in the production of the most sophisticated chips (2 nanometres) used in technology-intensive sectors such as the automotive and electronics industries.

Analysing the medium-term scenarios envisaged by the European Commission, many analysts agree that the objective is not easily achievable. According to the experts, the greatest difficulty lies in the rapid creation of an adequate infrastructure network that can and will encourage the growth of micro-component production. In addition to this, it would be necessary to reconsider the EU’s internal production costs, which are higher than those of Asian countries and do not favour a competitive production-cost-quality ratio compared to non-EU countries.

Researchers in the sector are certain that by 2030 the EU will not succeed in achieving complete production independence from microchips, but it will certainly be able to compete in the production of semiconductors with slices of the domestic market, while also reducing foreign supplies.