Hardly a week goes by without reports of a new semiconductor factory planned in the United States or Europe. In Germany, Infineon wants to build in Dresden and US chipmaker Intel in Magdeburg. And there's a persistent rumor that TSMC from Taiwan is also considering building a plant in this country. 

Joe Biden has already successfully lured TSMC and Samsung from Korea to the US, where they are building multibillion dollar chip plants.

Subsidies are the key. The Biden administration's Inflation Reduction Act has $370 billion (€352 billion) at its disposal. In addition, the Chips and Science Act with total funding of $280 billion is meant to strengthen the US in the field of semiconductors, promote research and development, and create regional high-tech centers.

Can technology companies from the EU resist the lure of US subsidies in the long run? Is the EU Chips Act, which is supposed to serve the same purpose with around €43 billion, sufficient? With those billions, Europe's share of global chip production is supposed to double to 20% by 2030.

"Europe is the world champion in announcements and not good at implementation," complained Andreas Gerstenmayer, head of the Austrian technology group AT&S, to the Handelsblatt newspaper at the end of November. "The sum is far too small to make a difference on a global scale."

Europe has a long history of chipmaking

There is already a fear in Europe that important companies will relocate to the US and skip Europe.

It is a fear not shared by Marcus Gloger, an industry expert at Strategy& — the strategy arm of the PwC consultancy. He thinks repeated criticism that Europe has only about 10% of global chip production fails to take into account that the continent also has "important knowledge and a well-trained workforce."

"That is completely underestimated. You can have factories anywhere. But they need people who are trained for these jobs," Gloger told DW. "Thanks to the long history of semiconductors in Europe, you can fall back on several centers where people have been trained in this area," he said.

One of these places is the Interuniversity Microelectronics Center in Leuven, Belgium, where even Big Tech competitors conduct research together. There are other European semiconductor clusters, for example, around Munich, the so-called Silicon Saxony near Dresden and the French university town of Grenoble.

Europe not only has the EU Chips Act, it also has the European Recovery Fund, which has set itself the same goal as the Inflation Reductions Act in the US. This entire range of EU funds of around €1.9 trillion will be available until 2030.

European Union backing

It was top officials and experts in the European Commission who campaigned for Europe to get more involved in high-end chips and supercomputing. To them securing digital sovereignty is more important than securing supply chains, said Gloger. Because the more the digital advances in the Internet of Things (IoT) or in the digitization of state and society through artificial intelligence (AI), technological sovereignty must be guaranteed.

Two of the four most powerful supercomputers in the world are already in Europe — in Bologna, Italy, and in Finland. And by 2024, the first German exascale supercomputer should be up and running in Jülich. With more than 1,000 petaflops, the supercomputer called JUPITER will have the computing power of more than five million modern notebooks. Other exascale supercomputers are set to follow in Munich and Stuttgart.

Handing out cash is not enough

According to Gloger, the assumption that companies locate where they get the most subsidies is not true. "It takes a whole ecosystem. Just building a chip factory is not enough. Materials and research are needed, and a whole network of companies."

In Big Tech, highly skilled professionals get paid the more or less the same salaries in Europe, China and the US which is why "the right framework conditions are key to being able to keep these people," said Gloger, adding that it's important for them to have alternative options in Europe.

"When top people move to another country or continent with their families, it is important for them to know that in addition to the company they start with, there are also others in the region to switch to," said Gloger, an aspect that's often "not taken seriously enough."

According to Gloger, relevant research would also matter and is an area where Europe is still leading. In Germany, for example, researchers from the Fraunhofer and Max Plank Institutes set the pace in the development of Industry 4.0, while the Leibniz Institutes and the Ferdinand Braun Institute are also places of scientific excellence, he said.

Germany shines when it comes to semiconductor clusters too. In Silicon Saxony, a microchip cluster around Dresden, there are around 200 companies working in the semiconductor business. For suppliers, this infrastructure means they can get support in minutes instead of days. This help is essential, because delays at a semiconductor factory can cost the company tens of millions of euros.

Stepping on the gas in Europe

Europe has the brains, cutting-edge research and leading international clusters in the semiconductor industry. Unique suppliers such as ASML in the Netherlands, the industrial optics group Zeiss or the industrial laser specialist Trumpf are also in Europe, as are manufacturers of industrial gases and cleanroom technology.

"What is missing is speed in implementation. We in Europe have to be braver and more determined in our decisions. I think that both the German government and industry can definitely achieve that," concluded Gloger.

This article originally appeared in German.