Semiconductors will help Europe take its destiny in hand

17 Jan 2022

Europe must take its economic and industrial destiny in hand. So said Thierry Breton, EU Commissioner for the Internal Market, in a speech to the “A stronger industry for a more autonomous Europe” conference in Paris on 13th January 2022. Marking the start of the French Presidency of the Council of the European Union, Mr Breton set out a vision for European supply chains.

He addressed various issues including supply of raw materials, but particularly stressed the example of semiconductors. The semiconductor market will double by the end of the decade, he stated. And Europe had to prepare the ground to lead in next generation five nanometre or even sub two nanometre semiconductors.

New reality of global supply chains

Mr Breton began his speech by outlining the new reality post-Covid. The pandemic had shown that even partners such as the USA prioritised their own supply interests during the crisis. Europe can no longer rely exclusively on global supply chains.

The current shortages of semiconductors and the crisis in supply of fossil fuels further underscore Europe’s susceptibility to geopolitical forces. In raw materials too, from timber to lithium, Europe’s dependencies have been highlighted.

Sovereign, resilient, autonomous Europe

Against this backdrop, we need a sovereign, resilient and autonomous Europe, said Mr Breton. Achieving this vision includes investing in cutting-edge products and technologies, and being a leader in markets of the future. It means having the capacity to cater to our own needs and to export to world markets.

It’s not about producing everything, he added, but about sheltering Europe from the “hazards” of the “geopolitics of value chains”. Moreover, this can only be achieved at European level. Europe needs “a continental industrial policy; a more assertive policy, open to the world yet on our terms”.

EC committed to Industrial Alliances

The European Commission is committed to European Industrial Alliances, which have a key role to play, continued Mr Breton. He mentioned achievements in alliances on batteries, hydrogen and the cloud.

However, he focused on the example of semiconductors. Here, the Commissioner spoke about the importance of chips for the green and digital transitions, as well as the growth of the semiconductor market. And he noted that Europe has the “the best research” in LETI, IMEC and Fraunhofer, along with world-leading chip production equipment from ASML.

European Chips Act to speed research into factories

Crucially, the European Chips Act, announced last September, will accelerate the transition from research to factory, Mr Breton continued. All the ingredients are there to ensure security of supply along the value chain and better withstand potential crisis, he insisted: faster transition from research to factory, the right investment conditions, and promoting international partnerships.

Strengthening internal and external cooperation

In other parts of the speech, Mr Breton discussed the need to strengthen the ability of the European single market to react to a crisis. He also stressed the importance of international partnerships in ensuring supplies of minerals and critical raw materials.

Regaining position in standardisation

In addition, Mr Breton stated that he will shortly announce a standardisation strategy to “prevent major industrial players from exerting excessive influence on the development of European standards”.  Europe led the world in areas such as GSM and 3G, he said. But it has lost ground in recent years, he noted, citing China’s attempt to create its own standard on ultra-lightweight lithium metal batteries.

Creating a Europe of power

Mr Breton concluded by saying that Europe must equip itself to better defend its own interests. Its partners already had such measures in place, now Europe must do the same. These include tools such as export controls and regulations on foreign direct investment and subsidies.

“We have a unique opportunity” he insisted. Europe can add a new page to its story: “after the Europe of democracy and the Europe of the market, let us now pave the way for a Europe of power.”

Read the full speech here.