APPLiA’s Digital Interview: How to square the circle of the EU semiconductor strategy

How is the home appliance sector coping with the impending shortage of semiconductors supplies? What is key to a successful EU chips strategy? Alvaro Vilas, APPLiA’s Junior Digital and Competitiveness Policy Officer, discusses in the fourteenth episode of APPLiA’s digital interviews.

 

Watch APPLiA's fourteenth digital interview, here. 

To set the scene, what role do semiconductors play in the EU digital transition? 

To understand the importance of semiconductors in facilitating the EU digital transition, it is key to acknowledge the role they play as a whole. Pivotal to a wide range of digital transformations, semiconductor technologies are at the heart of product research and development for multiple sectors, including the home appliance industry, which heavily relies on the imports of such technologies for the manufacturing of its products. This is the main reason for the concern around the significant shortage in the supply of chips across various end markets.

The 2020–present global chip shortage “has already established a consolidated trend that risks having serious consequences on the European economy, impacting on the supply of a variety of goods, including home appliances”, outlined  Vilas. The true backbone of digitalisation, chips perform various functions in modern products which are vital to their performance, making them a truly essential and tactical component of the industry chain at both the EU and global level. 

How is the home appliance industry coping with the impending global shortage of semiconductors supplies?

Holding only 10% of market share in global semiconductors, Europe and more specifically, European companies, have already suffered the repercussions of the shortage, via drastic changes to their production processes, supply chains, and after-sales services. “This calls for the implementation of imminent measures to increase the market share and reduce EU dependency,” Vilas remarked. To this aim, the Union should undertake a harmonised strategy, with an eye to avoid a race to national subsidies for microchip plants, which would risk triggering the fragmentation of the Single Market.

The introduction of the EU Chips Act, unveiled by the European Commission in February 2022, “marks a step in the right direction,” however, building on equivalent initiatives undertaken at the global level, by the U.S. and China for instance, “the Act should aim to create more balanced interdependencies and to pave the way for Europe to grow stronger in the whole value chain,” detailed Vilas. 

What is key to a successful state-of-the-art EU chip ecosystem? 

Upon tackling the global crisis of semiconductors, Europe should make “securing chip availability for all uses a key priority”, towards creating a robust manufacturing environment that could deliver to all European companies, equally. As such, “while fostering the development of cutting-edge technologies, Europe should also ensure the production of more traditional chip designs ranging up to 50 mm,” explained Vilas, this way establishing a level-playing field for all sectors relying on their use. In this regard, the most recent mobilisation of 43 billion euros as part of public and private investment should trigger long-term private investment.

Finally, what does it take for Europe to advance the global technological race?

Nowadays, technological leadership has become a central dimension of geopolitical power. Therefore, for Europe to undertake the right approach to technological mastery is of utmost importance. Particularly, as the Nation faces a major push to gain momentum in the global semiconductor design and manufacturing ecosystem, Vilas highlighted how the winning recipe “should square the circle of technological sovereignty and EU competitiveness, making sure no one is left behind. 

Watch the full interview at this link.