Infineon Adds to Doubts About Europe’s Chipmaking Ambitions

by BLOOMBERG

The European Union’s plan to become a powerhouse in producing next-generation semiconductors will do little to help the region’s vital industries, one of its biggest homegrown chipmakers said Thursday.

“We think Europe should focus on bringing modern, but not state-of-the art technology” to meet local demand, Helmut Gassel, Infineon Technologies AG’s chief marketing officer, said in an interview.

As chip shortages ripple through industry after industry — preventing companies from fulfilling demand for products from cars to game consoles and refrigerators — the EU wants to double its chip production to at least 20% of global supply in the next decade.

The approach aims to boost the design and production of 20-nanometer to 10-nanometer chips with the help of a European alliance of chipmakers, research centers and national governments. Its second aim is to target production below 5-nanometers down to 2-nanometers, an ambitious goal not yet reached by industry leaders Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co.

But goals around producing cutting-edge chips, which are more expensive to make, have drawn skepticism from the industry. The decline of the region’s consumer electronics industry in recent decades has left Europe without obvious customers for the smallest and most powerful components. Carmakers, whose vehicles have room to hide bulkier chips, are where most of the demand for semiconductors lies, but at more mature levels.

Only fully autonomous cars would eventually be able to take advantage of the higher computing power found in the more advanced chips, Gassel said. The German chipmaker is one of the world’s largest suppliers of automotive chips.

“The vast majority, if not all of the components, in a car today and in the next five years to come, won’t take any benefit from anything below 20-nanometers,” Gassel said. “If your product doesn’t need the functionality, then you will not use it because every time you shrink” transistors on chips, the cost goes up exponentially.

A European Commission spokesperson didn’t immediately respond to a request for comment. European Industry Commissioner Thierry Breton is due to visit Dutch chip equipment maker ASML Holding NV on Thursday.

STMicroelectronics NV Chief Executive Officer Jean-Marc Chery has made similar comments about the EU’s ambitions. “If it’s about advanced technologies, we don’t have any reason to participate,” he said in an interview with French news channel BFM TV this month. “That’s marginal to our activities.”

Gassel said if the alliance plans were more targeted to the European ecosystem, including automotive, industrial and internet-of-things production, the company would be willing to participate.