The EU plans to increase investment to solve the "chip shortage" crisis

Since the beginning of this year, the impact of chip shortages on the European automotive industry has continued to intensify, and the "chip shortage" crisis is spreading to areas such as consumer electronics. Industry insiders expect that the chip shortage problem may even continue until next year. To this end, the EU plans to establish a "chip alliance" and invest heavily to achieve chip self-sufficiency.

According to German media reports, due to the shortage of chip supply, German automaker Daimler has suspended the production of Mercedes-Benz E-Class sedans at its Sindelfingen plant since last week. Prior to this, German Volkswagen and Audi both stopped production to varying degrees due to chip shortages.

The "chip shortage" crisis not only affects the global automotive industry, but also spreads rapidly to other fields, affecting consumer electronics companies such as Apple, Samsung, and HP.

A survey of thousands of companies by the Ifo Institute for Economic Research in Munich, Germany, showed that 45% of industrial companies complained about shortages of intermediate products in April, a higher proportion than in the past.

Jens-Oliver Nikrasch, an economist at Germany's Baden-Württemberg State Bank, said that although corporate orders surged, output did not increase sharply, mainly because the lack of intermediate products such as semiconductors caused many manufacturers to slow down production.

Analysts at Hana Securities in South Korea said that the chip shortage problem is more serious for auto companies in the second quarter, and this situation may last longer, even until next year. Reinhard Pross, CEO of German chip giant Infineon, also expects the chip shortage to continue until next year.

Analysts believe that the current chip shortage is closely related to the COVID-19 pandemic. On the one hand, lockdown measures have led to poor supply chains, and some chip products cannot be delivered as planned; on the other hand, working from home and online classes have led to a surge in demand for electronic products such as computers and smart phones, coupled with a rapid recovery in automobile demand, global chip production capacity continues to be tight, and chips are in short supply.

In addition, a fire accident at the main factory of Japanese semiconductor giant Renesas Electronics in March and extreme weather in Texas, a major semiconductor base in the United States, in February made the already tight chip supply even worse.

The chip shortage crisis has made EU countries realize that over-reliance on Asian and American suppliers will make it difficult to ensure the security of the supply chain under crisis conditions. To this end, it is necessary to change the situation of long-term underinvestment in chip production in Europe, increase public funding support, and attract chip giants to set up factories in Europe.

Recently, European media have disclosed that the European Union is considering establishing a "chip alliance" including companies such as STMicroelectronics, NXP Semiconductors, ASML and Infineon, in order to reduce dependence on imports in the context of tight global semiconductor supply chain.

According to Thierry Breton, the European Commission's internal market commissioner, the project aims to increase Europe's share of global semiconductor production from the current 10% to 20% by 2030, basically meeting Europe's chip demand through domestic production. The EU intends to spend huge sums of money to attract Intel, Samsung or TSMC to build high-end chip factories in Europe.

Intel is reportedly hoping that the European Union will provide 8 billion euros in government subsidies to support its construction of a chip factory in Europe. Intel will make a decision by the end of this year. If everything goes well, the factory construction period is expected to be two years. Intel hopes to become a major chip supplier in Europe by building a factory there.