Europe and Japan increase chip subsidies for fear of falling behind the United States and Germany | Subsidies | Europe
After the Biden administration introduced multiple bills to attract companies to set up factories in the United States through massive subsidies, Europe and Japan faced immense pressure. They, concerned about the outflow of production capacity, can only engage in a subsidy competition with the United States.
Intel invests over 30 billion euros in building a factory, the largest foreign-funded project in German history
On the 19th local time, the German government announced that it had reached an agreement with Intel, the largest chip manufacturer in the United States, on factory subsidies. German Chancellor Scholz and Intel CEO Geithner attended the signing ceremony.
In March 2022, Intel announced that it would invest 80 billion euros within 10 years to build new research and production facilities in multiple EU member states. As the most important part of the plan, the company plans to build two new chip factories in Magdeburg, Germany. Intel originally expected the new factory to cost 17 billion euros, with 40% supported by subsidies from Germany and the European Union. However, due to factors such as soaring energy costs in Europe, the cost of the project has also increased significantly. According to German media reports, the estimated cost of the new factory exceeds 30 billion euros, and Intel will receive approximately 10 billion euros in subsidies from the German government. This is also the largest foreign direct investment project in German history.
TSMC's first factory in Europe or settling in Germany will receive long-term orders from automotive companies
Another chip giant, TSMC, revealed earlier in June that it had sent a team to Germany to conduct on-site investigations on the establishment of the factory. Previously, according to local media reports, TSMC's first factory in Europe will be located in the industrial hub of Dresden in eastern Germany, with initial plans to mainly produce 22-28 nanometer process chips for automobiles. It is reported that TSMC will receive long-term stable order commitments from two major companies, Mercedes Benz and BMW. At present, German established car companies are catching up quickly and hoping to expand their electric vehicle market, with a strong demand for chips. Bloomberg revealed in May that the German government is expected to subsidize half of the cost of TSMC's factories.
The EU plans to double the share of chip production capacity
The European Commission officially announced the "Chip Act" in 2022, which aims to mobilize over 43 billion euros of public and private funds by 2030 to support chip research and production, and promote the construction of large chip manufacturing plants.
The Japanese government will subsidize over 300 billion yen for 2-nanometer chip factories
On the 18th, Japanese Minister of Economy, Trade and Industry, Yasumi Nishimura, inspected the construction site of chip company Rapidus in Hokkaido. He emphasized that the Japanese government will fully support the project.
Rapidus, newly established in 2022, is jointly funded by eight large Japanese companies including Toyota, Sony, and SoftBank, aiming to produce next-generation chips that can be used in fields such as supercomputers and artificial intelligence. In February this year, the company announced that its chip factory was located in Chitose City, Hokkaido. At the end of April, the Japanese government announced that it would provide the company with an additional 260 billion yen in subsidies on top of the 70 billion yen previously launched.
At present, the chip factory has started preliminary preparation work, and the construction of the factory is expected to start in September. Rapidus plans to build a 2-nanometer chip trial production line before January 2025 and mass produce it in 2027.
TSMC's shortage of scientific and technological talents in setting up factories in Japan is highlighted
On the one hand, the Japanese government is promoting domestic enterprises to increase their research and development efforts in cutting-edge chips, and on the other hand, it is also attracting overseas enterprises to set up factories in Japan. In Kiyoyo cho, Kumamoto Prefecture, western Japan, TSMC's factory construction is rapidly advancing.
The ripple effect of TSMC's establishment has gradually become apparent. The number of companies entering Kumamoto Prefecture has reached a new high for two consecutive years. Data shows that about a quarter of the companies entering in 2022 are related to chips. In addition, the average land price in Juyang Town has increased by 12%, with industrial land prices rising by more than 30%. However, at the same time, problems such as traffic congestion and a shortage of technological talents have also been exposed. Japanese experts believe that the global semiconductor industry is in a turning point, and for Japan, now is the last and most important opportunity.
US manufacturing plant construction expenses hit a new high
In the United States, driven by the Chip and Science Act and the Inflation Reduction Act, Census Bureau data shows that in April this year, domestic manufacturing plant construction spending in the United States reached a historic high. Bank of America and Merrill Lynch believe that the United States has entered a "manufacturing supercycle".
