The EU joins the chip-making arms race

Briefly: The European Union reached agreement on a €43B (US$47 billion) semiconductor subsidy package on Tuesday. The plan aims to double the EU’s current 10% share of the global chip market by 2030.

If it seems everyone’s suddenly racing to bring chip manufacturing home, it’s because they are. The humble chip is now arguably the world’s most important product:

  1. 📈 It’s already a $600B market, set to top a trillion dollars by 2030
  2. 🌎 It’s the world’s most traded good
  3. 📡 It’s key to several sectors like auto, telco, cleantech and defence
  4. 😬 And having too much of the chip supply chain beyond your reach can leave you vulnerable in the event of a pandemic or war

Intrigue’s take: The EU already has real semiconductor strengths. And $47B is certainly a lot of dough. But to put it in perspective: a single firm (Samsung) just announced a $230B chips investment in South Korea.

So sure, maybe Europe’s new Chips Act will help reduce its dependence on foreign chips. But the way things are headed, the EU might be lucky just to hold its current 10% market share.

Also worth noting:

  • Taiwan manufactures around 90% of the world’s most advanced semiconductor chips.
  • One analyst argues that since chip investment is being driven by geopolitics rather than economics, the resulting excess production could trigger a slump in the sector.
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