Manufacturers in Europe fear chronic chip shortages now that the US is luring manufacturers with billions of dollars in subsidies and there is still disagreement within Europe over the right strategy. So Germany and France are discussing a new industrial policy.
“Germany recently acquired a beautiful chip factory in Saxony,” says Germany correspondent Dirk Marseille. German electronics company Infineon will build this plant. “Intel will also build a large factory in Germany and that makes us want more.”
Consultations between Germany and France are separate from the European Union. First the two countries want an agreement and then the rest of Europe can join. Marseille believes that politicians in The Hague may think differently about this. “There they are trying to capture what is being discussed between the two countries, to see how the files are put together and how the cards are shuffled.”
European manufacturers say dozens of factories still need to be built in Europe to reduce the independence of the rest of the world when it comes to chip production. This requires investment. Either from the government or from the business community. Often companies only set up their factories when there are strong subsidy programs from the European Union or from the countries themselves. Manufacturers find €23 billion in EU support too little. “They say dependence on the US and Asia will remain high.”
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Plans from the European Union are to quadruple current chip production capacity by 2030. Manufacturers say more money really needs to come from governments to promote this, to attract companies as well as to develop capacity.
The relationship between France and Germany has suffered some setbacks recently. “For example, German Chancellor Olaf Scholz who went to China alone and French President Emmanuel Macron who made a public comment about it.” But according to Marseille, there is some hope on the horizon. It’s about shuttle diplomacy. German Foreign Minister Analina Berbock was in Paris. Just like Economy and Climate Minister Robert Habeck. Today, French Prime Minister Elisabeth Borne visits Chancellor Schulz in Berlin.
Key technologies, including chips, are on the agenda in all conversations. Marseille sees them working until January 22, 2023, on that day there will be 60 years of friendship between the two countries. “But it is not yet known if this will also be celebrated,” he added. According to Marseille, the talks on the new industrial policy are not yet a race. “It will take some time before they reach an agreement.”
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