Experts wonder whether the European Union should massively subsidize the

Experts wonder whether the European Union should massively subsidize the production of semiconductors

The European Union has provided large subsidies for the construction of new microchip manufacturing facilities under the Chip Act, which aims to increase the block’s share of the global semiconductor supply chain from the current 9% to 20% by 2030. Several experts have criticized this approach, calling it not the best use of taxpayers’ money.

    Image source: Pixabay

Image source: Pixabay

The level of government support could reach levels that even advocates of increased investment in chip production find excessive. writes financial times. Intel has previously agreed to provide 6.8 billion euros in government funding for the construction of a plant in Magdeburg (Germany). And now it is expected to receive around 10 billion euros in funding in connection with the increase in the project budget to almost 30 billion euros. Experts wonder why Intel should receive such a large subsidy, especially since there is so little demand in Germany for the advanced chips that the company will produce in Germany.

“This can lead to a significant misallocation of resources – says Reint Gropp (Reint Gropp), head of the Institute for Economic Research. Leibniz (IWH). “It would probably be more efficient to just buy cheap subsidized chips from the US.”

The federal government is divided on this issue. While Sven Schulze, Economics Minister of the state of Saxony-Anhalt, whose capital is Magdeburg, supported Intel’s call for an increase in state subsidies, German Finance Minister Christian Lindner asked in an interview with the German business daily Handelsblatt: “Urgently needed by German industry” these chips or they are simply sold on the world market.

His opinion is shared by a number of experts. Jan-Peter Kleinhans of the Denkfabrik Stiftung Neue responsibility claims that German demand for semiconductors is highest in the automotive, industrial automation and medical device industries. “None of them need modern chips in bulk” he says. According to him, for example, the automotive industry uses chips that were made after “old production technologies”, that have been on the market for a long time.

This approach (a bet on advanced chips) “threatening to ignore the real needs of Europe’s key industries”, says the expert ZVEI, the industry association for the electronics and digital industry in Germany.

Intel disagreed with this opinion. “There are many applications for advanced technologies in cars – for example autonomous driving, obstacle detection, entertainment systems.” – said the company’s representative in Europe, Markus Weingartner.

“Intel Magdeburg is a strategic investment and a bet on the future, Lukas Klingholz from the digital association Bitkom emphasized. — We don’t know exactly how the demand for advanced chips will develop in Europe, but in general it will definitely grow in the next few years. And so far, Europe has neither the capacity nor the know-how to produce them.”

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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