2023-05-13 12:55:00
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Vladimir Myronenko
The European Union has provided large subsidies for the construction of new microchip production facilities under the Chip Law, which is expected to increase the share of the block in the global semiconductor supply chain to 20% by 2030 from the current 9%. A number of experts criticized this approach, calling it not the best use of taxpayers’ money.
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The level of government support might reach a level that even supporters of increased investment in chip production consider excessive, writes financial times. For example, Intel has previously agreed on the allocation of 6.8 billion euros to it as state support for the construction of a plant in Magdeburg (Germany). And now it expects to receive regarding 10 billion euros in subsidies in connection with the increase in the project’s budget to almost 30 billion euros. Experts are wondering why Intel should receive such a large subsidy, especially given that there is so little domestic demand for the advanced chips it will produce in Germany.
“This can lead to 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 German government is divided on this issue. While Sven Schulze, Minister of Economic Affairs of the state of Saxony-Anhalt, whose capital is Magdeburg, supported Intel’s demand for increased state subsidies, German Finance Minister Christian Lindner asked in an interview with the German business newspaper Handelsblatt, “really needed by German industry” these chips or they will simply be sold on the world market.
His opinion is shared by a number of experts. Jan-Peter Kleinhans of the think-tank Stiftung Neue Verantwortung claims that Germany’s demand for semiconductors is highest in the automotive, industrial automation and medical device industries. “None of them need modern chips in large quantities,” he says. According to him, the automotive industry, for example, uses chips made according to “old production technologies”, which have been on the market for a long time.
This approach (a bet on advanced chips) “threatens to ignore the real needs of Europe’s key industries”, echoes the expert ZVEI, the trade organization representing the electronic and digital sectors in Germany.
Intel disagreed with this opinion. “There are many applications for advanced technologies in cars – autonomous driving, obstacle detection, entertainment system, for example,” – said the representative of the company in Europe, Markus Weingartner.
“Intel Magdeburg is a strategic investment and a bet on the future, Lukas Klingholz of the digital association Bitkom insists. — We do not 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.”
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