Summer in Europe is usually a time of holidays and relaxation when people and companies prepare themselves for the onslaught of a busy autumn and winter. However, things are different this year, as the electronics industry is riding significant waves of investment in semiconductor manufacturing.
The semiconductor supply chain has suffered unprecedented shortages from the lasting effects of Covid-19 disruptions. The pandemic caused chaos across global supply chains, particularly with complex ones, such as semiconductors, that had recognized long-standing vulnerabilities. Realizing the dependency that European electronics manufacturers have on an ecosystem of Asian semiconductor manufacturers, Covid’s impact on long complex supply chains and the increasing emphasis on geopolitical risks, the European Union took action. With the aim of strengthening the European semiconductor ecosystem and supply chain, all 22 EU member states adopted a joint declaration on semiconductor technologies in December 2020. This initiative led the way for what has become known as the EU Chips Act, first proposed in February 2022 and passed into law on July 25, 2023.
EU Chips Act assembles €43 billion investment
The EU Chips Act aims to double Europe’s share of global semiconductor production from 10% to 20% by 2030. The €43 billion pot comes from direct EU monies, member states and public-private collaborations, and €11 billion comes from the EU’s Chips for Europe Initiative. While the EU recognized the importance of its semiconductor supply chain becoming increasingly self-sufficient, it still left many vital decisions on allocating it.
In November 2022, Deloitte, a global management consultancy, published an independent and insightful report that highlighted some of the critical decisions facing the EU. “A new dawn for European chips” considers four possible scenarios for the European technology sector in the next decade, ranging from trillion-dollar valuations of European pure-play semiconductor companies to Europe becoming a technology desert. The report notes that Europe is one of many countries investing in semiconductor self-sufficiency. There are also crucial technology decisions, such as which wafer size (200 mm or 300 mm) to focus investment on, and the complex nature of making semiconductors relies on a complex ecosystem of specialist industry partners. For example, Europe currently consumes approximately 20% of global chips, but the region’s share of everything from chip design to assembly and testing are still in the single digits. The report also observes that with worldwide semiconductor output forecast to double by 2030, for the EU to achieve its ambitious 20% goal, it needs to quadruple output.
Intel calls out European fab commitments
In June this year, Intel inked its plans for an initial investment of more than €33 billion to establish advanced semiconductor fabs and new R&D hubs across Europe. Having communicated its initial intentions in March, Intel’s recent announcement commits to a larger investment and names building a leading-edge semiconductor “mega-site” of two fabs in Magdeburg, Germany, in addition to a new research and development and design hub in France, as well as expanding established manufacturing, foundry services and back-end production facilities in Ireland, Italy, Poland and Spain. Supported by the EU Chips Act, Intel intends to invest €30 billion in building the Magdeburg fabs, €11 billion of which are subsidies from the German government.
TSMC, Bosch, Infineon and NXP to build 300-mm fab
Hot on the heels of Intel’s news is the announcement from TSMC, Robert Bosch, Infineon and NXP regarding their joint investments in European Semiconductor Manufacturing Company (ESMC) to construct a €10 billion 300-mm fab in Dresden, Germany. The joint venture is 70% owned by TSMC, with the other companies holding 10% each. TSMC is investing €3.5 billion, with €5 billion coming from the German government. Construction is scheduled to begin in 2024, with the first production commencing in 2027. A monthly production capacity of 40,000 300-mm wafers is forecast using TSMC’s 28-/22-nm planar CMOS and 16-/12-nm FinFET processes.
Commenting on the ESMC announcement, Malcolm Penn, CEO and founder of Future Horizons, a semiconductor research company, said, “Overall, it’s a good thing for Europe, without a doubt. The even better thing is the fact that they’ve got NXP, Infineon and Bosch as part of the partnership, making it a shared fab. Having a European shared fab has always been on the top of my list of priorities, and now, with a proper technology partner in TSMC, this thing could fly.”
Penn observed that its location in Saxony is also good news: “Silicon Saxony has been flying high since the wall came down, and they have done an outstanding job of making it a hub, and it has a good ecosystem, too. So it’s undoubtedly sustainable, which you really need.”
Regarding the choice of wafer size, the Deloitte report highlights the need to discuss getting the right mix of the more mature 200-mm (8-inch) or leading-edge 300-mm (12-inch) wafer plants for European customers. EE Times Europe asked Penn his view on ESMC opting for 300 mm. “Yes, 300 mm is the only cost-effective choice,” he said. “The world is moving to 300 mm wherever they can, and it’s only where it’s difficult or impossible, as with silicon carbide at the moment, that you’re forced into a smaller wafer size. When 300 mm first came in, everybody said analog couldn’t be done on it because it was too fragmented, too small, etc. However, analog predominantly is now in 300 mm, so absolutely it’s the right choice.”
Will Europe achieve its goal of doubling capacity? “It is a step in the right direction,” Penn said. “It is an ambitious target, but having Intel and TSMC there, it will move the dial for sure.”