Competition in the semiconductor marketplace is sharpened. Taiwan's TSMC (Taiwan Semiconductor Manufacturing Company) is building a fresh mill in Arizona that will consume US$12 billion. This investment is crucial not only from a business point of view, but besides from a geopolitical point of view. For this reason, the construction was visited by president Joe Biden and Tim Cook, president of Apple.
Taiwan Semiconductor Manufacturing Company (TSMC) is liable for over 90% of the production of state-of-the-art semiconductors utilized in smartphones and 53% of all types of chips. Europe accounts for about 10% of the value of the full process of creating integrated circuits and semiconductors, China accounts for 26%, and the US accounts for 33%. The production of integrated circuits is an highly complex process, the individual cells of which are spread around the world. In respective parts of the production chain there are bottlenecks and there are companies with a monopolistic position. During the period of the COVID-19 pandemic, this translated into problems for car manufacturers and electronics, including the largest European and American, who were forced to halt production precisely by deficiency of access to semiconductors produced in Asia.
President Joe Biden signed a bill this year, in which around $52.7 billion was foreseen for the improvement of the American semiconductor manufacture – including investigation and development, as well as for worker training and incentives for companies. In a akin direction, the European Union - in spring, the European Commission presented a draft Chips Act, in which public support for the improvement of chip production in Europe is expected to amount to around EUR 43 billion and additional funds are to be mobilised in the form of private investment by 2030. The completion of EU government is expected in the first half of 2023 and the common position of the associate States has now been agreed.
The European Commission sets as 1 of its strategical objectives a 20% marketplace share of semiconductors by 2030. The pressures of Brussels and Washington to decision production from Asia to Europe and the US are due not only to business considerations but besides to safety considerations. Production in Europe is focused on older technologies and larger systems (used, among others, in the automotive industry, but besides large for state-of-the-art electronic equipment), and companies from our continent are liable for only about 4% of investments, leading to an increased distance from technological leaders. The Chip Act is to change this situation, and affirmative signals besides flow from the largest companies – in March 2022. Intel, a giant in the semiconductor and integrated circuits industry, announced its investment programme in Europe, in which EUR 33 billion is to be spent on investments in the production process, including in R & D centres in Poland.
Drawing the TSMC mill to the US is undoubtedly a success of American economical diplomacy. In Europe, the company has not announced investment decisions of a comparable scale. As the Polish economical Institute points out, deglobalization of production chains and alleged friendshoring, i.e. the relocation of production to countries in good relations with the country in which the company is established, is just beginning, and competition between countries and regions for attracting investment tightens. The next fewer years can bring considerable changes to the market, and the scale of the essential investments and the level of dependence of another industries on the supply of chips indicates how advanced the stake is playing.
nationalists.net/Polish economical Institute
