back to article EU directs €11bn toward European Chips Act to build homegrown semiconductor industry

The European Commission has presented its European Chips Act with an initial investment of €11bn to strengthen research and development, and drive greater self-reliance in the semiconductor market. The European Chips Act is a wide-ranging set of measures that aims to build strength in chip design and manufacturing, and is …

  1. Anonymous Coward
    Anonymous Coward

    And thanks to Brexit

    We have nothing to do with this boondoggle.

    Trebles all round!

    1. Jellied Eel Silver badge

      Re: And thanks to Brexit

      I remember wanting a transputer as a kid. Also not looked back into that to see if state support helped or hindered Inmos.

      And I remember a physics friend telling me that weird things happen <7nm, so guessing there's a few challenges to getting <1nm parts.

      1. Yet Another Anonymous coward Silver badge

        Re: And thanks to Brexit

        Good job that British universities won't be involved in researching what happens at 1nm and how to solve it.

        There is no point in doing the research because we can just read the Dutch/German research and use it in our own cutting edge fabs, built by all the semiconductor experts we have trained

        1. elsergiovolador Silver badge

          Re: And thanks to Brexit

          British universities will be researching what impact on chips wellbeing has the fact they are being locked in tight enclosures for years without seeing a daylight except for a rare occasion they get dropped or get soaked in liquid and a technician has to open the case to replace their dead buddies.

      2. Tom 7

        Re: And thanks to Brexit

        I wanted a transputer as an adult. One day I found a 1024 transputer hypercube standing in the lift well at work unattended. I think I probably looked like a mid air coyote deciding which way to fall for about 10 minutes before I finally admitted it wouldnt fit in my car and there was no-where I could realistically hide it so I wandered off befuddled!

        As for the transputer I thing it died because of shit UK management. They got in a bit with the military and got complacent and ignored the potential for PC/Server type sales. I did a lot of virtual transputer programming and would have been a great expandable PC for science/engineering stuff.

    2. codejunky Silver badge

      Re: And thanks to Brexit


      "We have nothing to do with this boondoggle."

      Yeah its great isnt it! Your welcome!

      1. Anonymous Coward
  2. James 51

    I don't understand why there isn't a push to get 28nm or 40nm production in the EU or even bigger transistors if that's still too expensive. There's a need for electronics that aren't cutting edge and affordable. Industries like cars could adapt if they knew they had a secure supply.

    1. Yet Another Anonymous coward Silver badge

      Because it still costs $$$$ to build a last generation fab

      By the time the fab is running in 3-4years there may well be a glut of these parts.

      The parts you are making (power electronics, low cost micro-controllers) have a profit margin of 0.0% so you are going to be shipping the wafers to SE Asia for dicing and packaging and making into products - so no strategic advantage to European customers in the next trade disruption.

      1. James 51

        The EU is saying this is strategic, that is something vital that needs to be exempt from usual market forces because of the impact on wider society if supply is interrupted. That’s normally the reason given for propping up unprofitable steel industries, in a time of war they would be needed and supplies could be cut off. If the chip industry is that important (and it is), then it should be given similar levels of support and that applies to the whole chain, not one link within it.

    2. elsergiovolador Silver badge

      There is even a need for 80nm processes - also things like specialised chipsets cannot be built with 28nm or less.

      So what's the point of having 1nm chip if you still have to source supporting electronics from Asia and without it, a chip is just a fancy rock.

      They could paint faces on them and sell as pet rocks.

      1. Fr. Ted Crilly Silver badge

        Packaged in a folded up 'jump to conclusions' mat... ;-)

    3. Justthefacts Silver badge

      You don’t understand?

      The EU don’t want to invest in 28-90nm, simply because they won’t be able to declare “European Leadership”. Ironically, the one systemically important fab the EU has, STMicro, realised four generations ago that they couldn’t afford the capital investment implications of vanity. Which was a perfectly sensible strategy, and the right one.

      It’s not *me* that’s crapping all over European expertise. It’s the *Commission* saying that all the best EU experts are wrong.

      1. elsergiovolador Silver badge

        Re: You don’t understand?

        You can't say anything "bad" about the holy EU empire, triggers so many people...

        1. James 51

          Re: You don’t understand?

          What triggers me isn't criticism of the EU (there’s a lot that needs critiquing), it's stupidity. It's not holy and it's not an empire. Unless you’re going to invoke Poe’s law but remember you’re suppose to give some sort of nod or a wink to indicate that’s the case.

          1. Justthefacts Silver badge

            Re: You don’t understand?

            It’s not an internet meme though, it’s a quote from Voltaire.

            “The Holy Roman Empire was neither Holy nor Roman, nor an Empire.”

            Sigh. The state of education today.

            By the way, the EU flag is the emblem of the Blessed Virgin Mary, whose Catholic designer Arsene Heitz has stated on record that is exactly what he intended it to be, when he submitted it to the competition for the Council of Europe in 1950. The flag has 12 stars, and the Council had 10 states at that time.

            1. adam 40 Silver badge

              Heitz by their own plus tard

              I predict that this chip foundry will be too little, too late, just like the EU's vaccine procurement.

            2. Yet Another Anonymous coward Silver badge

              Re: You don’t understand?

              The council of Europe had more members depending how you count. But the Germans didnt want Saarland included (it had been given to France after WW2), they eventually ended up with 13 and the Italians didn't want an unlucky number so it became a symbolic 12

              There is a less fun story of the link to the virgin Mary 12 gold stars / blue. The original proposals had been for crosses because some of the founders where committed to a Christian Europe (having got rid of the Jews, there were very few Muslims and we can soon remove the commies). Its worth remembering that the fascists didn't all disappear in 1945

              1. Yet Another Anonymous coward Silver badge

                Re: You don’t understand?

                Not anti-Eu, just saying that Europe in the 1950s wasn't exactly a bunch of social democrats all busy organising Black history month and promoting LGBTQQIP2SAA pride.

  3. elsergiovolador Silver badge


    Bureaucrats must love these Soviet style plans. It gives them reason to call countless meetings, banquets, trips and being in centre of attention looking important while achieving net zero.

    But unlike Soviets with their 5-year plans, they wisened up to 8 years - more time to pull the wool, more champagne and probably many will jump straight into retirement at 2030 :-)

    Why it is not going to work? The EU simply does not have economy to support such monumental task. They need exceptionally talented people who are not going to work for EU salaries and high taxes. Many of those people go into this trade with a view to start their own business and with EU's bureaucracy they'll more likely get mental health problems than go anywhere through the meandres of procedural traps set-up to ensure there is only space for big corporations on the market.

    So how do average citizen apply for funds to start a chip factory or the money as usual will go to the rich club?

    1. Justthefacts Silver badge

      Re: Economy

      Actually, it’s not that bad. You’re *right* that all the money will go to a pre-selected aristocracy with the right connections. But it’s not nearly as much money as they want you to think. One just has to go through the details on the EU website with a fine-tooth comb.

      The headline is 11bn initial investment, 52bn total, but that’s largely mythical. The *actual* EU investment is:

      “EUR 4 175 000 000, including up to EUR 50 174 000 for administrative costs distributed as follows:

      (a) up to EUR 2 650 000 000 from Horizon Europe;

      (b) up to EUR 1 525 000 000 from the Digital Europe Programme;”

      The Horizon money is what they were already committed to spend within total European R&D. just they are now saying they will focus it on this. Ok, why not, but it isn’t new money, it’s just a research priority within previously agreed funding taken from other areas.

      The only new money is 1.525bn, spread over 8 years, which is less than 200m per year. Compared to TSMC spending 40bn per year.

      According to vdLeyen, the gap between the 4.175bn and 11bn is expected to be made up by *loans* from the European Investment Bank. Now, I’ve had words about this before. This is highly aggressive new technology development. It simply isn’t low risk. If the development fails, and look at Intel 10nm delays, the EIB is badly out of pocket….out of what budget? They literally have none. It isn’t an institution that gets grants from Member States, it’s a zero-sum pot of money. The EIB will either be instantaneously bankrupt with systemic collapse of the Euro system (you know that won’t happen), or they will have to get the ECB to print central bank money to cover their loss retrospectively. There is literally no way out of that hole.

      Or maybe, it’s a very sound low-risk investment. Then the EIB gets repaid *all of it*, and it’s just a rather odd way of announcing a standard bond placement on the open market that would get funded otherwise by commercial investment banks. Then, how is this “EU funding”?

      Now that’s 11bn. Where’s the other 41bn coming from? Von der Leyen says that half the total amount is public, which leaves her committing 15bn of Member States National budgets to co-investment….which she has no say in, and no right to commit to. I’ve not heard a single country stand up and say “Hey, that’s us! We *were* going to spend the money on our hospitals, but for the next 8 years we’re funding this instead”.

      And finally, the last 26bn is going to come from private companies co-investment which really is other people’s money, they do what they like with it. Why would private companies commit 26bn of their own money, on a project entirely defined by the Commission, to leverage just 1.5bn of Commission funding? That’s *6%* subsidy. That’s hardly going to be a game-changer.

      1. Justthefacts Silver badge

        Re: Economy

        Actually, I’ve figured out what the 15bn of Member States money she is promising is. They aren’t going to have to find 15bn actual cash. Instead, it’s going to be 15bn tax breaks to Intel and STMicro. The Member States are going to have 15bn less tax income to spend on their hospitals, but it won’t be listed as spending in any budget.

        The Commission’s part in this, is that *normally* that would count as illegal state aid. But she’s saying (I can’t find the para now but it is explicit) is that as a special favour, she won’t prosecute them so long they give the illegal state aid to her preferred bidders.

      2. Jellied Eel Silver badge

        Re: Economy

        It's just the EU being technofetish again.

        As fo funding, that chip has long sailed. EIB and ECB are already deep in the red having been doing QE and stimulus. So the EU is sitting on a mountain of commercial paper, which makes increasing interest rates risky.

        1. Justthefacts Silver badge

          Re: Economy

          The EIB may be solvent (absent future losses), it’s very difficult to tell.

          The ECB however is absolutely f*ed. Even with just their past losses to date, already crystallised, they are 340bn in the red. With a *negative* interest rate of -0.5% on a loan book of 6.2 trillion, they are committed to a *further future* loss of a further 240bn, just for the privilege of *lending* money.

          And that’s all without a single cent of default loss anywhere in a 6trillion portfolio, which is totally unrealistic even in the most sunshine of sunshine scenarios.

          In other news, eurozone inflation is 5%. So quite soon, a couple trillion shortfall may not be as troubling. And I’m not being sarcastic, I’m aware that the U.K. has potential inflation issues too. But it’s easy to forget this is how our parents ultimately afforded their houses. 10% inflation ultimately cures many ills of catastrophic decision-making, even if leaves pensioners in unheated houses eating baked beans.

          1. Binraider Silver badge

            Re: Economy

            I know we've disagreed in the past Justthefacts - though on this you are spot on. Inflation is in many respects a cure for the ludicrous disparity of property and rental costs versus salaries.

            Then you get comedy gold like the BoE bosses asking for moderation in pay rises so as to not stoke inflation.

            30 years of artificially suppressed supply/demand/inflation are on the verge of going pop. 5% is just the tip of the iceberg here IMO. The next question is how the hell do you hedge against it (either as a private individual, or a government).

      3. This post has been deleted by its author

      4. Lars Silver badge

        Re: Economy

        The EIB

        "The European Investment Bank (EIB) is the European Union's investment bank and is owned by the EU Member States. It is one of the largest supranational lenders in the world. The EIB is a not-for-profit organisation which funds projects that achieve the policy aims of the European Union through loans, guarantees and technical assistance."

        "The EIB is not funded through the budget of the EU. Instead, it raises money through the international capital markets by issuing bonds. The EIB is rated triple-A, the most credit-worthy rating on the bond market, by ‘The Big Three’ credit rating agencies Moody's, Standard and Poor's, and Fitch. Each Member State pays capital into the EIB's reserves which is broadly in line with their share of EU gross domestic product".

        "Since its inception in 1958 the EIB has invested over one trillion euros. It primarily funds projects that ‘cannot be entirely financed by the various means available in the individual Member States’. "

        EIB has reserves for €526 billion.

        1. Justthefacts Silver badge

          Re: Economy

          No it doesn’t. Reading Wikipedia doesn’t make you an finance expert. You need to do a bunch more learning to find out how banking actually works, and the EIB in particular.

          The EIB has 526 billion loans outstanding. *Normal* Banks are supposed to keep reserve ratios to cover the possibility/probability of loan default, and that’s defined by Basel III regulations to be 7% ratio. No bank carries anything like 53%, and most go right on the legal minimum 7-8%.

          However, the EIB as so many EU institutions, is “special”. The EIB has written rules for itself that it doesn’t need to follow Basel III reserve ratios, because it is risk-free, because it is backstopped by the EU nations. The EIB has *zero* reserve requirement. At any one time they have a couple billion cash float, but they recirculate *everything*. This year, they made 1.7bn profit on 500bn outstanding. That’s nice…but it’s 0.3% instead of 7% for a commercial bank. It’s sort of fine, because it’s a non-profit. But you need to understand that sometime between now and 2040, some of those loans are going to default catastrophically. That’s capitalism. A normal bank would dip into its *cash* reserves, but EIB can’t as it has none.

          There’s the implicit EU guarantee subsidy. The EIB currently has 526 billion outstanding loans. According to Basel III, it *ought* to be retaining 37bn reserves to cover its operating risk of defaults. But it doesn’t.

          I do feel that you are quite young. You haven’t really seen businesses fail, been in at the death. Businesses fail when they run out of *cash*. Not “balance sheet profit”, nor “money they are owed”. And it’s brutal when it happens, and suddenly everyone’s yelling where’s my f*ing money, and people are coming into the office just taking chairs from under people who don’t know what’s going on. And there’s people in tears, because they are owed their salary cheque from last month too when there was an “admin error”, but suddenly they realise they are never going to get paid and they still owe their rent tomorrow.

          The EIB has *zero cash* to pay the rent, ever. All their “reserves” are the “guaranteed” income from the loans they wrote. This doesn’t go on for ever.

          1. adam 40 Silver badge

            Re: Economy

            The question is, though, what will be the trigger that brings the house of cards down?


          2. Citizen of Nowhere

            Re: Economy

            >This doesn’t go on for ever.

            It's been going on since 1958. While the EIB may have a higher risk appetite overall than it had in the past, I doubt it is any danger of succumbing to 'catastrophic defaults'. I guess we'll find out between now and 2040.

            1. Justthefacts Silver badge

              Re: Economy

              Lehman Brothers was founded in 1850, Baring Capital in 1762, NatWest has origins in 1658….

              Those were businesses with excellent risk management and entrepreneurial flair, who financed the rise of empires and weathered their fall.

              EIB *will* fail eventually, that’s the reality of humanity. The problem arises when they become systemically important and backstopped by Government. Ultimately taxpayers are entirely unaware that they are responsible for an investment banking business. A business famously described as “picking up pennies in front of bulldozers”.

              The reality is that this is government debt, being held off-balance-sheet. I’m not against government spending and investment, not at all. When governments spend twenty billion on hospitals and issues gilts to cover it, I’m all for it. What I find really worrying, though, is that when I add up all the off-balance sheet debt the EU is holding ( EIB, ECB, Target2, PPP, etc, etc, ), it comes to an additional 50% of EU GDP. The current official member state debt-to-gdp ratio is 97%, which is absolutely fine. But the total true ratio is 147% (give or take).

              It’s generally believed that the flashing-danger signal is about 140% ratio, and above 170% is irrecoverable collapse. It seems the EU is above flashing-danger already, and in striking distance of the 170% threshold within the next couple of decades, because the additional debt ratio is off-balance-sheet and largely unmonitored except by people who know what to look for. The Greek debt debacle really took off when the ratio reached 150% in 2010, and Greece became entirely dependent on external bailout shortly thereafter when it reached 180%. By the way, it’s currently 207%.

              1. Citizen of Nowhere

                Re: Economy

                >Those were businesses with excellent risk management and entrepreneurial flair

                If we just take the example of Lehman Brothers, it's collapse does not suggest it had excellent risk management at that time. It was ludicrously exposed in the US subprime mortgages market. The pursuit of easy money turned out to be rather costly.

                Of course, as I am unable to see into the future, perhaps I am wrong and the EU, and with it the EIB, will collapse some time soon. Speculative doom-mongering to that effect is, however, almost as old as the EU project itself. Personally, I think it rather more likely that the UK's collapse will precede that event. We are all free to speculate on the future.

                As of this moment, I don't see any sign of an imminent collapse of the EIB.

              2. Jellied Eel Silver badge

                Re: Economy

                I think the implosion will be in stages, driven by the commercial debt the EU's taken on. Something that struck me was the EU buying debt in companies like BMW and Mercedes finance arms. So basically lending money so the finance companies can buy the cars the production side makes. Then declining new car sales, and rising costs adding to inflation. Which then makes leasing costs higher, and the whole thing implodes.

                But such is politics. It's frustrating that more sensible investments weren't made. So for example building nuclear power plants is expensive, but keeps energy costs down, which would make the EU more competitive. Having operators raise capital on the markets just increases costs as lenders expect ROI.

            2. Justthefacts Silver badge

              Re: Economy

              Your comment has aged remarkably badly….The EIB currently have 5.5bn lent out to Ukraine, 1.5bn to Russia, 1.5bn to Byeloruss. Includes for example, 300m to Sberbank, and financing the Transit system in Kharkiv. I assume you accept that’s money the EIB will never see a penny of? 8.5bn down the drain, less than a month after you thought the EIB could never have serious losses.

              The point was never that the EIB had uniquely bad judgement, of course it does not. The point was this is money the EU have lent out that simply wasn’t in any budget. Those losses aren’t going to be covered by the Member States contributions, rather the Member States are now going to need to fund it with *new extra* money, and take that out of what they *were* going to spend internally. That’s 8.5bn of medical care and school education that Member States are now going to *not provide*. Pensions reduced. Riots not policed.

              And within months, this might be well become 85bn…..or 400bn….as the trickle effects of the war become apparent.

              Very, very stupid. Thank god we got out.

  4. elsergiovolador Silver badge

    How to address the skills shortage?

    The Chips for Europe Initiative will support education, training, skilling and reskilling initiatives. Action will support access to postgraduate programmes in microelectronics, short-term training courses, job placements/traineeships and apprenticeships and training in advanced laboratories.

    Shows how out of touch they are. No mention of what someone investing their time is going to get in exchange. They think people will be extatic for having a chance to reskill, only to find out they'll living situation won't change much. The drive in the EU is to ensure everyone makes broadly the same amount of money through progressive taxation (excluding the elites of course). So what's the point for a person to dive into the books and forget about social life for years, if they can make much more money selling weed while actually enjoying life?

  5. Binraider Silver badge

    As noted in other recent articles, power and clean water; are rather expensive in both the UK and Europe; and the staff overhead is obvious.

    I suppose the "green" credentials of a Europe made silicon wafer would be better than China or USA. But still far from perfect. Gas and Lignite being fairly common generation sources still (maybe 50-odd percent of all generation Europe wide).

    An independent source of supply has other advantages one supposes in terms of geopolitik.

    1. confused and dazed

      I've never understood the staff overhead angle. In the grand scheme of funding a fab you can pay your top workers what you want ?

      1. Binraider Silver badge

        125k/year * qty of staff * number of years operation.

        Swap out that first number for salary of "competent" folks in respective countries.

        On long enough timeframe, staff is your biggest cost, always.

        1. Tom 7

          A $10 billion fab would have to somehow expend 80 thousand man years for staff costs to exceed building it. I doubt even the tories could manage that.

  6. Omnipresent Bronze badge

    I would love to see it.

    It takes about 20 billion to start a factory. This money is for research and development. TBH I think the Brits could do very well with chip production, and I would love to see it. Maybe you can give us a better future than the one we are staring at currently.

  7. MarineTech


    I'm questioning the feasibility of this. As I recall the Reg ran a story last week or the week prior regarding European fabs shuttering because energy costs are too high and they were not profitable. Adding more fabs, without addressing the energy costs for production, means billions spent on facilities that will never be used.

  8. TimMaher Silver badge


    Build it there.

    Centuries of experience making the finest chips on the planet.

    Mine’s the one with a tube of mayonnaise in the pocket.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like