EU semiconductor plans falter as Intel halts investments

Intel, a major U.S. technology company, announced on Monday that it would delay the construction of a significant microchips plant in Magdeburg, Germany, and another investment in Poland by two years due to financial losses. This decision poses a challenge for EU Commission President Ursula von der Leyen, who has prioritized a stronger industrial strategy to enhance Europe's competitiveness in key technologies. The delays hinder the EU's ambitions to increase its share of the global microchips market, which is crucial for various industries, including automotive and electronics. The EU's European Chips Act aimed to boost the bloc's share of the global microchips value chain from 9% in 2022 to 20% by 2030. However, recent reports indicate that the EU is far from achieving this target, with projections suggesting only an increase to 11.7% by 2030. Despite these setbacks, EU executives continue to promote the Chips Act as a success, citing commitments of €115 billion in public and private funding. The situation is further complicated by Germany's struggle to secure funding for its support of Intel's projects, as a court ruling prevented the repurposing of an emergency fund. German Chancellor Olaf Scholz expressed continued support for the Intel project, emphasizing its importance. Meanwhile, the EU's reliance on smaller investments and the TSMC factory in Dresden highlights the challenges in establishing a robust semiconductor industry in Europe. As the global competition for semiconductor manufacturing intensifies, the EU's ability to attract and retain major investments like Intel's will be critical for its industrial strategy and economic future.