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European chip funding is paying off but more needed, says ZVEI

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January 03, 2025

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Subsidies, such as those provided under the auspices of the European Chips Act, are producing beneficial results, but Europe needs to do more and on a broader front if it is to compete globally, says industry body ZVEI.

The Zentralverband Elektrotechnik und Elektronikindustrie eV, is the German electrical and electronic manufacturers’ association.

A report produced for ZVEI by Tanjeff Schadt, a partner at a consultancy called Strategy&, states that investment by the state in microelectronics pays off financially but that the European Union’s goal of achieving 20 percent of chip manufacturing capacity by 2030 cannot be achieved by the present level of support.

Losing global share

Instead Europe’s market share will drop from 8.1 percent currently to 5.9 percent because other regions are doing more, the ZVEI claims. “Europe is threatened with a further decline in production capacities and could become a pawn of geopolitical power interests,” warned ZVEI president Gunther Kegel, in a statement.

Study author Schadt said that funds used for microelectronics achieve a high return and pay for themselves within nine to twelve years.

Current investment plans are set to increase annual gross value added in Europe by €33 billion yielding an additional €7.9 billion in tax revenues per year and creating 65,000 jobs in Europe, including 49,000 jobs in Europe. Each direct job creates six other jobs along the value chain.

“The figures clearly show that the investment pays off and creates the basis for Europe’s competitiveness and innovative strength. We see economic growth and employment growth across the entire value chain,” Schadt said in the statement.

Don’t forget PCBs

Kegel said current funding commitments can only be a first step and must be increased and also applied to the broader microelectronics ecosystem.

“We cannot allow ourselves to allow our market shares in printed circuit boards and electronics manufacturing to melt away any more,” Kegel said. The EU’s market share in the global PCB market is well below five percent with 85 to 90 percent of the worldwide production volume is produced in China and Taiwan.

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