EU wants to produce 20% of the world’s chips by 2030

Of all the world powers jockeying for a spot in the chipmaking market, Europe has set a particularly audacious goal. The EU wants to produce 20% of the world’s chips by 2030, up from 9% today, with a focus on cutting-edge models.

Skeptics believe that hitting that target is improbable, but the bloc has made progress. Intel Corp. announced earlier this year that it would build a mega fab in Germany. And GlobalFoundries Inc. and STMicroelectronics NV are talking about building a new factory together in France.

One key missing piece, however, is Taiwan Semiconductor Manufacturing Co. TSMC, the world’s premier chip foundry, held a symposium in Amsterdam in June, where Chief Executive Officer C.C. Wei spoke about the importance of the company’s European customers. But TSMC hasn’t yet committed to building a facility in Europe. That’s even though the company has been in talks with Germany about a plant since at least July 2021.

TSMC’s chairman recently said that the company doesn’t have any specific plans to build a plant in Europe—sparking concern in the EU that a deal is entirely off the table. (It isn’t, I’ve been told.) Still, the comment shows just how different TSMC’s style is compared to Intel, whose CEO Pat Gelsinger publicly hyped its European expansion for months. It could also signal, more troublingly, that the semiconductor industry still isn’t convinced Europe will become a hub for advanced chipmaking.

It doesn’t help that EU countries haven’t made up their minds about what they want. Led by France, countries with large automotive industries want the EU to allow companies producing the mature chips needed by car companies to also qualify for state aid—a move that risks delaying the EU’s approval of the Chips Act over subsidy spats.

In Amsterdam, Wei spent his time on stage flattering Europe for being an automotive hub. Wei knows that his customers there have not been demanding advanced chips, but rather the more mature chips that are causing shortages at car plants. Wei joked that demand is so high that companies like Volkswagen, whose CEO Herbert Deiss was in the audience, are asking for single sheets of wafers from TSMC.

Meanwhile, there are signs that the global chip shortage—which sparked much of the urgency around expanding capacity, including Europe’s Chip Act—could be winding down. Last week, Micron Technology Inc. reported disappointing earnings, suggesting demand was falling. And in recent weeks, chip stocks have taken a beating.

It’s possible that TSMC is just biding its time in Europe. The company kept quiet about plans to build in the US until it had an actual proposal to announce. And Wei has spoken about how the car industry will soon need advanced chips, especially as cars increasingly become supercomputers on wheels.

For now though, the company is staying cautious. It’s already dedicating four Asian sites to focus on 28-nanometer chips for car producers. The economic outlook is cloudy—with tech stocks low and inflation high. And the company’s expansion into Arizona has been expensive and frustrating because of competition for talent.

Kevin Zhang, TSMC’s senior vice president of business development, told me in Amsterdam that the company’s focus is on “where the puck is going; not where the puck is today.” The question in Brussels is whether that puck will bring cutting edge chips to Europe. Jillian Deutsch, Bloomberg