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Researchers have urged EU member states to invest far more in chip design in order to establish independence from China, and other parts of the production chain need to be taken seriously.
When the German engineering and technology company Bosch inaugurated a new chip factory in Dresden earlier this year, the event received widespread media coverage. The factory offers specialized chips for the automotive sector. Modern chip manufacturing facilities are scarce throughout the EU. “This is the first Bosch AIoT plant to combine artificial intelligence (AI) with the Internet of Things,” Annett Fischer, Bosch’s spokeswoman, told DW in July.
Technology expert Jan-Peter Kleinhans from the Berlin-based research center Stiftung Neue Verantwortung (SNV) called the venture “a modern structure for energy electronics, in the automotive portfolio, in which Bosch specializes”.
However, the Bosch plant is almost “a drop in the ocean of chip production.”
Supply network liquefaction
The year-end analysis shows that European economies seem to be among the hardest hit by the global shortage of chips, which continues to greatly affect the output wave.
Car manufacturers have had to delay vehicle deliveries. There is a lack of internet equipment, game control panels and many other items that depend entirely on chips.
Lessons to be learned
Kleinhans and Chinese analyst John Lee, who until recently was part of the Mercator Institute for Chinese Studies (MERICS), are co-authors of an analysis that shows how Europe should respond to China’s game over chips. They advise policymakers on how to mitigate Chinese influence in the chip industry in European economies.
The European Commission is certainly aware of the barriers to the supply of chips and is working on the European Chips Act, a draft of which should be ready by the middle of next year. A lot of money will be made available to strengthen the EU chip ecosystem and build strategic alliances with international partners to achieve this goal.
Europe’s ration across the chip chain has been declining recently, including in design and production capacity, compared to the growing capabilities of other nations.
Brussels fully understands that over-reliance on China and other major players could severely affect the EU’s technological sovereignty. What makes the EU’s ties with China so complicated is that while it is still a cooperating partner, China is increasingly seen as a systematic competitor and rival, meaning that dependencies may also involve core security issues. .
The importance of chip design
In their recently published report, Kleinhans and Lee strongly advise European policymakers to encourage more investment in the EU chip design ecosystem, “focusing on improving conditions for startups and spin-offs by research institutions. , Also seeking better and faster access to private financing and capital
public. “We are not talking about competing with China, but about achieving a rebalancing,” Lee told DW.
“The point is not to overtake China in chip design, because that is not going to happen. “Europe can not achieve this, but what we are trying to say is that we should not depend so much on China.”
Problems with foreign products
Kleinhans and Lee also point out the current imbalance in the final step of the chip production chain, which includes assembling, testing and packaging them. Silicon wafers contain many small integrated circuits that must be cut and protected from damage by sealing them before they can be attached to devices such as smartphones. The workflow is intensive and has shifted mainly to Asia, with over 60% of global capacity based in Taiwan and China, the report notes. Increasingly, however, advanced packaging is essential for the development of higher performance chips and lower power requirements.
Only 5% of this production phase is located in Europe, creating another dependence on China and other Asian competitors. “Advanced packaging is an area in which industry leaders in China and elsewhere are focusing a lot at the moment, as an alternative way to increase computing power,” Lee said. “So packaging is becoming a much more significant element of the production chain than it was five or six years ago.”
Producing more silicon wafers in Europe is certainly a worthwhile endeavor, but if they are then shipped to China for assembly, testing and packaging, potential malicious actors could compromise the chips. Packaging processes provide protection, which would make it difficult to use the chips. This is definitely something that EU policymakers can not ignore when drafting the European Chip Act./DW
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