Europe is surrounded by crises of various types. That is why he is trying to gain independence on several fronts, including one of the seemingly inconspicuous, but at the same time fundamental areas – the production of semiconductor chips. The economic condition of Europe was first disrupted by the covid pandemic, another blow has now come with the war in Ukraine. However, some countries could come out of the crisis stronger. One example is Lithuania, which, like the Czech Republic, is building stronger relationships with semiconductor powerhouse Taiwan; at the expense of China.
The covid pandemic has triggered a worldwide shortage of chips. Demand for integrated circuits exceeded supply, causing production delays of several months to a year and significant price increases virtually worldwide.
With the Russian invasion of Ukraine, the global semiconductor industry received yet another intervention. Ukraine has so far accounted for more than half of the world’s supply of neon, the key gas used in lasers used in semiconductor manufacturing.
Faced with this challenge, the European Commission has taken the first steps. The plan, published in February this year, aims to secure reliable European supply chains, prevent future shortages of semiconductors and attract investment in the industry.
Double its market share by 2030
However, the ambitious proposal, which requires the approval of the European Parliament, aims to “strengthen European competitiveness, resilience and help achieve a digital and green transformation”.
As part of a broader “chip” strategy, the European Union is seeking to raise more than €42 billion in private and public investment. The result should be the ability to react quickly to any future supply failures.
The text was originally published on the media platform Visegrad Insight, with which HlídacíPes.org cooperates. The author of the analysis is Malina Mindrutescu.
Currently, the EU’s share of global chip production is 9%. As a result, the Union wants to double its market share to 20% by 2030.
The lack of chips in the world is also a big problem for Central Europe. In Romania, the Dacia brand had to cut production twice in 2021, according to a report from emerging Europe, for a total of 33 days in February and October. The Czech Škoda Auto also had problems.
However, given the extreme demand for semiconductors and Europe’s efforts to reduce its dependence on external sources, it is also suggested that the whole crisis could be a new impetus for Central Europe. .
A semiconductor factory project is already underway in Germany; This is an initiative of the European Commission launched last June, which has already been supported by most EU Member States, including Central Europe.
It is for them that their geographical proximity to Germany will be an asset in the search for greater European independence in the production of chips.
The factory behind our humans
The factory should develop in Dresden, in the heart of Central Europe near Poland and the Czech Republic. The easy access to transport and the proximity of the three countries could reinforce the active role of Central Europe in all efforts aimed at strengthening the microchip infrastructure.
The ideal candidate for a key country in the whole process could be Poland (it has a central location, resources, low production costs, ready infrastructure and an educated workforce). However, after his recent deviations from the European course, he is expected to send assurances to the EU that he is “on board” again.
Countries seeking EU support for semiconductors should also have their own “appropriate state policy and long-term strategy”, says Piotr Lewandowski, a researcher at Poland’s Lukasiewicz Research Network.
However, European investment alone may not be enough for the EU to really get involved in the battle for chip production and score points in the global market.
Intel, one of the world’s largest semiconductor companies, announced plans to open new production facilities in the EU early last year. It wants to invest 80 billion euros over the next decade. Germany and France are expected to receive most of this money, but Italy and Poland are also looking for it.
Intel already operates in Gdansk, Poland, where it has one of its largest European factories with over 3,000 employees. The company has already announced its desire to expand further. This would give Poland access to direct investments worth tens of millions of euros.
Another key point, as Tyson Baker, head of technology at the German Council on Foreign Relations, pointed out, is that the EU treats the US as a partner, not a rival in the marketplace; on the contrary, strategic interconnections in the production of semiconductors are expected to increase.
According to Baker, this potential Euro-American partnership should be on the same footing as the Transatlantic Trade and Investment Agreement (TTIP). One of the main goals of such cooperation would be to balance China’s influence and reduce Europe’s unhealthy dependence on Chinese semiconductors.
The semiconductor supply crisis has exacerbated Europe’s dependence on Chinese supplies. Now, a more assertive approach from the EU, and particularly from Central European countries, could attract new investment, technical training and talent to the region. It is already happening.
Lithuania as an example for the Czech Republic?
The most visible example is Lithuania, which has engaged in a diplomatic dispute with China to forge closer relations with Taiwan, which Beijing considers its territory. In response, China stopped trading with Lithuania and even blocked imports of products from other countries containing components from Lithuania.
In return, as the world’s largest semiconductor maker, Taiwan announced the establishment of a $200 million investment fund to mitigate the effects of China’s economic boycott. The fund, the first of its kind in Taiwanese history, has also increased the chances of chip cooperation.
The Taiwan Semiconductor Company (TSMC) has already come under pressure from many foreign governments to diversify its production. In 2020, it held an above-average share of 54% in global sales.
Taiwan reacted cautiously, saying only its strategic partners, such as the United States and Japan, can receive its chips – countries that could theoretically help Taiwan in the event of an attack, according to Politico magazine.
Although the initial investment promised to Lithuania does not reach the amount necessary to start the production of chips, the Baltic country has entered the game in one of the most prestigious industries.
In strategic technologies such as semiconductors, Taiwan is increasingly focusing on Central European countries. Already in November 2021, a Taiwanese delegation led by the Minister of Foreign Affairs visited Slovakia and the Czech Republic in addition to Lithuania.
Although working with Taiwan does not produce immediate results, the region can benefit in the long term. So far, for example, thanks to exchanges and expert groups evaluating the capabilities of suppliers, over time the cooperation can turn into an open economic and technological partnership.
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