Spain will invest 11,000 million euros in microchips and semiconductors. They’re very few

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Pedro Sánchez, President of the Government of Spain, has announced a Strategic Project for Economic Recovery and Transformation (PERTE). It will be endowed with 11,000 million euros of public investment and has a clear objective: to boost the semiconductor segment in our country.

Ad. During his speech at the opening of the Wake Up! Spain, Pedro Sanchez has announced a PERTE of microchips and semiconductors endowed with 11,000 million euros. According to Sánchez, “semiconductors are a basic element of all energy sectors and acquire global geostrategic importance in a context of digital transformation of our economy.” He also added that “the Government wants our country to be at the forefront of industrial and technological progress.”

An industry in the hands of TSMC and Asian factories: the map of world chip production

Europe does not want to depend on Asia and the US (but it has it raw). The announcement is the Spanish continuation of the European Chip Law, a great plan of 43,000 million euros that aims to avoid the dependency that the old continent has on Asia and the United States in the field of semiconductors.

The challenge is that by 2030 Europe will be responsible for 20% of world chip production, doubling the current 10%. That as a challenge is very good, but it will be very difficult to achieve something like that because the US is also investing heavily, and neither TSMC nor Samsung are going to loosen up, as we will see later.

Intel, an ally of European aspirations. Intel will invest she single-handedly spends $20 billion on a chip factory in Ohio that will become the largest in the world. The American giant will invest another 17 billion dollars in a European megafactory in Magdeburg, Germany, an announcement that was very well received by the European Union, and that gives clues as to what can be done with those 11 billion euros.

Foreign factories vs European factories. The truth is that the Spanish experience in this area is very, very far from the great benchmarks in Asia and the United States, and there is also a shortage of qualified workers. Certainly there are initiatives such as the European RISC-V processor in which the Spanish company Semidynamics collaborates, but here it seems logical to think that this investment could attract a semiconductor factory of some large foreign manufacturer (Asian, American) to our country, which makes that sought independence is made up.

At the event Wake Up! Spain had candidates sponsoring the event such as Huawei, for example, but also companies in the aeronautical industry (Airbus) or automotive industry (Kia), which are clear sectors in which investment in semiconductors can alleviate the great problems of chip shortages.

Better late than never? The investment project is good news, but the criticism is easy: Europe (and the US) is reacting too late. The world has been delegating chip manufacturing to China for decades — where labor was cheaper — and everything was going well until the trade wars and the pandemic have put that entire structure in check. Manufacturing here was more expensive, so we all seemed happy handing over that work to Asian countries.

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If we talk about pure manufacturers (foundries), TSMC is absolute dominator. Only Samsung comes close, and Intel has no presence of its own, although that’s exactly what Gelsinger wants to fix in the future. It will not be easy for them, much less for Europe. Source: Statistics.

Now the whole world wants to be more independent, and here not only Europe is seeking its strategic independence. The United States is well positioned with Intel and Micron as benchmarks. Here we must bear in mind that NVIDIA, Qualcomm, AMD or Apple are ‘fabless’ and delegate manufacturing to Asian ‘foundries’. The Biden Administration will invest 52 billion dollars in this sector, but it will be difficult to stand up to giants such as the Taiwanese TSMC —which overwhelmingly dominates this industry— or the South Korean Samsung.

Why? Well, because the latter are not going to be easily caught. TSMC plans invest a whopping 100 billion dollars until 2024 to be able to increase its manufacturing capacity. Samsung already announced the upcoming creation of a $17 billion factory in Texas, which will be part of a staggering $205 billion investment that includes chips, biopharmaceuticals and telecommunications.

Suddenly those 11 billion euros seem to fall a little short. Very short.

Image | parliament

Pedro Sánchez, President of the Government of Spain, has announced a Strategic Project for Economic Recovery and Transformation (PERTE). It…

Pedro Sánchez, President of the Government of Spain, has announced a Strategic Project for Economic Recovery and Transformation (PERTE). It…

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