Semiconductors are the new oil. They serve as the backbone of modern technology, powering everything from smartphones and computers to automotive systems and advanced manufacturing devices. 

Investment scale

Europe has been trailing behind in the manufacturing and design of cutting-edge chips. This is partly due to management decisions over the last years and decades, but also due to the simple fact that European companies often cannot keep up with American, Korean or Taiwanese investments. While welcoming the European Chips Act, it is already clear to industriAll Europe that the EU strategy will not pay off in the short term. However, in the long run, it is likely to strengthen the chip value chain and foster European strategic autonomy.

Regional imbalance 

The concentration of semiconductor fabs in certain EU regions has led to collaboration across the value chain, but also risks creating geographical imbalances in resource allocation. We already see that the bulk of investments is planned in countries with the deepest pockets. It is therefore essential that the overall strategy considers the regional dimension as well as the social and the territorial cohesion of the European Union.
The semiconductor industry is also witnessing a significant increase in investments globally. Those massive investments could lead to the risk of overcapacity in the industry. A subsidy race must be avoided, and funds have to be spent efficiently without creating overcapacities and market distortions.

Skills shortages 

Skills shortages are likely to hinder the development of the chip industries. To avoid this, major efforts to up- and reskill the workforce need to be made. It is essential that the investment promised not only goes into the new facilities, but also into training.
Social conditionalities 

Significant public funds are being allocated to attract investments into the chip sector. This can be highly questionable when there are no conditionalities attached. Unlike the US Act, the EU Chips Act lacks workforce-related terms and conditions. The attractiveness of semiconductor companies is also a major issue on which a great deal of effort needs to be focused in the short/medium term, particularly in the areas of working conditions, competitive salary conditions and values issues (diversity and ESG). The responsibility of companies appears to be strongly engaged here.

Sustainability

Together with social and employment conditions, funding must also be linked to sustainability clauses and conditions. The EU Chips Act only considers the environmental impact based on the final product’s performance and the manufacturing process. When deciding on EU Funds and State aid, the Commission should ensure coherence with EU sustainability goals.

IndustriAll Europe Deputy General Secretary, Isabelle Barthès, said:

Europe is clearly lagging behind in the chips race: chip giants are not European, and European investment remains limited compared to other regions of the globe. The EU might not be able to reach its 20% target of the world production in 2030. However, the EU has become aware of its de-industrialisation and of the fact that many countries around the world have introduced industrial policies. The European strategy is taking shape but more efforts have to be made including on skills, working conditions and environmental issues.

“While industrial policy is increasingly meddling with geopolitics, we should make sure that the industrial strategy does not become a chip war, fueling a global dispute. Indeed, the collaboration between companies, both domestically and internationally, can help optimise production capacity and reduce the risk of overcapacity. We need to weigh carefully the notions of strategic autonomy and strategic interdependence, without running the risk of instrumentalisation of the chip supply chains for political gains.

“As trade unions, we must ensure at European and national level that the money invested benefits workers and all regions.”