Today, our society revolves around computing, whether it’s the economy, society, or industry. For these systems to function, semiconductors are essential. However, during the COVID-19 crisis, we saw that this material is very difficult to produce and limited in supply. So, what can the European Union do when it does not produce this vital technology asset for our society?
A Complex Material
Semiconductors are ubiquitous in our modern world. They are the beating heart of most of our electronic devices. Whether it’s preventing our computers from overheating, powering our tablets and smartphones, or being a key component in transistor radios, televisions, video game consoles, or even life-saving medical equipment, their presence is central.
However, semiconductors do not only serve our daily needs. They are also crucial in advanced sectors such as Industry 4.0, aerospace, and automotive industries.
These application areas underscore the indispensable nature of semiconductors. Powering advanced technologies that shape our future. But despite being a vital element for our society, what exactly are they?
A semiconductor is a chemical compound that has the electrical characteristics of an insulator but also of a conductor, and can switch between both roles depending on the conditions to control electrical current. Even though this component is omnipresent in our digital tools, it is not easy to create, and the major producing countries are scarce.
The worst happened: a global semiconductor shortage from 2020 to 2023, due to various factors such as COVID-19, the energy crisis in China, and the war in Ukraine. These crises led to an increase in demand, which was already growing, and inevitably a decrease in supply. As a result, several industries were impacted, notably the automotive industry, which saw prices rise significantly. This was also the case with graphics cards, which became immediately out of stock and created a black market fueled by cryptocurrency miners.
So, after experiencing an unprecedented crisis, what is the European Union doing to prevent this situation from happening again?
European Union Directives
To strengthen technological advancement and address shortages, the European Union has decided to adopt a new regulation that will mobilize €43 billion in investments from both the public and private sectors. This regulation, driven by Brussels, will be based on three pillars:
- An initiative: It will support the enhancement of technological and innovation capacities.
- A framework: It aims to encourage private and public investments in facilities that will secure the EU’s supply.
- A coordination mechanism: Recognizing the sector’s vital importance, the EU will supervise it through the European Council to ensure production continuity.
These pillars ultimately aim to strengthen Europe’s lead in research and technology to develop smaller and faster electronic chips. They establish a framework to increase production capacity to 20% of the global market by 2030. Additionally, they seek to develop and enhance the ability to innovate in the design, manufacturing, and packaging of advanced electronic chips. Furthermore, achieving a deep understanding of global semiconductor supply chains is crucial to better anticipate and manage risks. Lastly, these pillars address the skill shortage, attract new talents, and support the creation of a qualified workforce to ensure the success of this initiative
In the end, after suffering a shortage that made many industries unable to continue their production, the European Union made the right choice with this regulation to strengthen its autonomy and protect its industries. Moreover, a key sector like this, which can potentially paralyze an entire continent’s economy, requires state control to foster strong cooperation.
In a world where technology is evolving at lightning speed and semiconductors are becoming the backbone of our digital society, the European Union must take bold measures to ensure its autonomy and competitiveness. The new semiconductor regulation embodies this vision, aiming to strengthen innovation, secure supply, and attract talent to build a more resilient and autonomous future.
