Big European nations likely to gain the most from EU chip push

The European Commission’s plan to make the continent more lucrative for investing in semiconductor factories will likely skew the benefits towards larger countries such as Germany, France and Italy, analysts say.

With billions of euros of public and private investment, along with covering up to 100% of the proven funding gap with public resources, a subsidy race could tilt the balance toward countries with larger resources.

“I don’t see how that can be avoided as that’s just the nature of the beast ... same as in the US where states give different subsidies to get the companies to build in a given state,” Gartner chip analyst Alan Priestley said.

Chip manufacturing in Europe has dropped from 24% of global production capacity in 2000 to a current 8%, and chipmaker ASML warned that it could fall to 4% if no action is taken.

US firms now have a 47% market share of the chip industry, followed by Asia, with Europe a distant third, according to data from the Semiconductor Industry Association.

The current European chip legislation helps to address that by providing deeper subsidies and state support to grab a 20% share of the global capacity by 2030.

Industry sources pointed to more global collaboration with other regions as the chip supply chain spans the world, otherwise it would cost at least 1 trillion euro for a fully autonomous chip supply chain.