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25 EU countries, but also Israel, Turkey
and Norway. The second pillar is to set
up more “Open EU Foundries” using
advanced technology nodes. The third
pillar is to ensure continuity of supply to
the continent and the ability to intervene
in case of a supply-related crisis.
Similar to the EU’s efforts, Japan’s
Minist r y of Economy, Trade and
Industry (METI) has taken significant
steps to boost domestic production of
advanced chips. In the late eighties,
Japan manufact ured over 50% of
the world’s semiconductors. Today,
it supplies less than 10%. Figure 2
shows the historical trend and the
2022 forecast of semiconductor capital
expenditure (CapEx) by headquarters
l o c a t io n . T h e l a c k of fo c u s o n
Figure 1: Global semiconductor manufacturing by location in percent. SOURCES: Boston Consulting Group,
Semiconductor Industry Association, SEMI semiconductors on the part of the U.S.,
EU, and particularly Japan, is very
problem statement as: “U.S. leadership in their own equivalent “CHIPS Act” to try telling in these trend lines. While the
semiconductor is threatened by the lack to achieve their own strategic autonomy percent of the U.S. semiconductor-
of U.S.-based capacity for prototyping, and resilience. The EU launched an related CapEx has dropped from 31%
scaling and transfer-to-manufacturing ambitious project in 2013 to double to 27%, and Europe’s has dropped
of b r e a k t h r ou g h s e m ic ond u c t or its onshore share of semiconductor from 8% to 3% from 1990 through
technologies that are the foundation of production. However, almost ten years today, Japan’s share of semi CapEx has
future information and communications on, its share has remained around 10%. dropped significantly, from 51% to less
solutions necessar y for national This time around, seemingly more than 4%, during the same period. Just
security and economic resiliency.” The serious, the EU has launched its own like the U.S. and the EU, the Japanese
CHIPS Act is geared towards a “course “CHIPS Act” in February of this year government is also adopting policies
correction” to grow the capability from that is geared to generate €43 billion to ensure “strategic autonomy and
lab-to-fab domestically. in public and private funding. Similar indispensability.” In November of 2021,
The second argument about such to the U.S. bill, the EU Act has three it approved a ¥774 billion package
industry subsidies being a protectionist distinct pillars. The first pillar is to to boost domestic semiconductor
move is not unfounded either. Indeed, increase research, development and production that included a ¥400 billion
despite all the progress in globalization pilot production lines on European soil. subsidy to TSMC for a new foundry in
made during the last decades, the This partnership not only includes the the southern island of Kyushu.
recent trend seems to be more toward
protectionism with an increasingly
polarized view of the world—a world that
has become increasingly complex by the
realities of today’s heightened geopolitical
tensions. But the goal here is not
necessarily to take over semiconductor
manufacturing domination from the likes
of Taiwan or the Asian nanoscale duopoly
of Samsung and TSMC, but rather to
achieve a healthy level of independence of
the semiconductor supply chain to reduce
the risk of dwindling or no supplies, at
least for some of the critical products.
Even if the U.S., EU and Japan tried to
take over semiconductor manufacturing
dominance, it will take years, perhaps
even a decade or so, based on their
capabilities today.
The U.S. is not alone in this quest to
achieve a healthy level of independence.
Both Europe and Japan have launched
Figure 2: Semiconductor capital expenditure by headquarter locations. SOURCE: IC Insights

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