Europe’s €200bn Investment

Europe needs to spend €35 billion to achieve its aim of doubling the value of its manufactured semiconductor output and a total of €200 billion across the entire electronics value chain of which €50-60 billion should come from government.That is the conclusion of the European Leaders Group (ELG) who reported to EC vp Neelie Kroes in June on how to achieve her target of a doubling of Europe’s semiconductor market share from 10% to 20%.

On 23 May 2013, the Commission announced the Electronics Strategy for Europe (IP/13/455). The strategy aims, by 2020, to facilitate industry investment of €100 billion; double the value of EU micro-chip production to reach 20% of worldwide production; and create 250, 000 jobs in Europe.

The ELG report dated June 26th reports that the investment needed to achieve the doubling of semiconductor production value is €35 billion.

Between 2015 and 2018, the ELG says that €18.8 billion needs to be spent on capex and €12.5 billion on R&D.

“On the supply side, the group (ELG) sees a clear opportunity for further private investments in chip production in Europe as demonstrated by the large industrial investments in pilot lines in 2012-13,” says the EC, commenting on the ELG report, “the move from pilot lines into mass production of innovative components and systems will be pursued in the next seven years. The ELG estimates that €20 billion investment will be needed for this. This would correspond to adding every two years a capacity of 70,000 new wafers per month from 2016/17 onwards, an average of 10% increased capacity per year. “



  1. That’s a good point Jack but only €50-60bn of that €200bn comes from government and the whole €200bn is to be spent over six years. By contrast the CAP budget is €95 billion a year. I think the money is more productively spent on tech than on farmers.

  2. 35bn enough to increase capacity by 20% but it does not guarantee an increase of 20% in market share.
    To throw 200bn across the electronics value chain would be like how Intel gives subsidy on its Atom processor on mobile market, an increase in market share but with a loss biz. Can’t imagine how Neelie convinces Euro govt to bulk up 200bn with sacrifice in increase tax for the people prolly where in the end, the benefit would only be felt by the top mgmt such as Bozo.

  3. Well the usual way to extract dosh from pols, Mike, is to give them an initial, reasonable sounding figure then up it as and when it becomes clear that the initial figure was too low. Give them too high a figure (even though realistic) to start with and they get frightened off. It’s all psychological and sneaky but it’s the most effective way.

  4. Maybe a little more back of a fag packet calculations in advance might have led to more realistic expectations ?

    A $300bn industry due to grow to well over $450bn in the timescales mentioned, that invests 20% of sales in capex unfortunately leads to massive sums that need to be invested.

    Either go with it or not, but don’t think there are cheaper short cuts to success.

  5. Yes the figures all look a bit pie-in-the-sky Mike, as SilverMan points out. But even Neelie might balk at $145 billion over six years.

  6. Since in total Intel, Samsung and TSMC will each invest far more than €35 billion over the 2015 to 2018 period, then adding in GloFo, SMIC and the rest, I fail to see how €35 billion will get Europe to anywhere near 20%. Indeed it will just about hold the status quo. My calculations presented at Imec in March put the investment needed at $145bn over the 2014 to 2020 period.

  7. Yes Keith, it’s ironic that the guys who caused the problem we face are asked to solve it. And I’m sure that getting the money without committing their companies to anything is their No.1 priority.

  8. Of which the vast majority will end up in the pockets of the ELG members. ELG is a consortium of failed ‘leaders’ of the former semicondcutor industry in Europe. Neelie Kroes is out of her depth here, in a jungle of crooks.

  9. Well of course these big picture types toss billions around like confetti, Silverman, I suppose the greater the imprecision of the number the more opaque is the possibility of scrutiny.

  10. Just wonderfully scientific looking figures! 200 billion! not 174 or 203 but 200…… nice to see the back of fag packets are not going to waste in EU meeting!

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