EU Digital Policy Chief Vestager Says Eurozone Can’t Rely On A Few “Very Big” Chip Suppliers To Alleviate Global Shortage

The EU’s digital policy chief, Margrethe Vestager, has officially warned that countries should not be relying on just a “handful of very big” chip producers to help alleviate the global chip shortage. 

Instead, European leaders have called for more investment – something that the EU is actively considering – to help with the bottlenecked supply chain, according to The Irish Times. 

Vestager told Bloomberg TV that she thought the EU should be aiming for “a much more diversified supply chain”.

“It’s important that we focus on the global market… also European production is meant for a global market, because we get the right competitive pressure,” she said on Wednesday.

She continued: “We cannot just have it that we depend on very few, very big chip producers.”

European Commission president Ursula von der Leyen joined the chorus of government officials addressing the issue and asking for “substantial investment” in the industry on Wednesday. She noted that a “European Chips Act” was forthcoming and that it would help further research, design, testing and production.

Eamonn Sinnott, general manager of Intel Ireland, responded by stating his company “has plans to invest billions of euros in new leading-edge semiconductor manufacturing capacity in Europe. Today’s announcement of an EU chip Act to foster a vibrant, cutting-edge and future-proof semiconductor ecosystem in Europe is a welcome step and aligned with our shared ambitions to reinvigorate the sector in the EU.”

Still, as we noted back in August, leading chipmakers continue to rake in big bucks. The top 10 players by market capitalization booked $276 million in net profit in April-June, an increase of about 60% on the year and their sixth straight quarter of gains. They are also pursuing major expansions, largely in logic chips. TSMC plans to make $100 billion in capital investments over three years, while Intel has announced plans for a new $20 billion plant in Arizona.

Meanwhile, the global semi shortage continues to sting all industries, but technology and automobiles are suffering from the most pronounced drawbacks. We noted about three weeks ago that VW and Toyota both had to cut output as a result of the chip drought. 

Global shortages of semiconductors could wind up cutting worldwide production of autos this year by about 7.1 million vehicles, Bloomberg predicted last month. 

IHS predicts that 2.1 million units could wind up being lost in the third quarter of 2021 alone. 

An IHS report stated: “The situation is still fraught with challenges. We are also seeing additional volatility due to Covid-19 lockdown measures in Malaysia where many back-end chip packaging and testing operations are performed.”