2025 marks the end of the first half of the 2020s, a decade that has seen the geopolitics of
semiconductors take on a significance and resonance rarely, if ever, seen before. The trigger for
this explosion of interest was undoubtedly the Covid-19 pandemic, which led to a crisis in car
production due to a shortage of semiconductor components – chips. The impact, including on
public opinion, of the long delays in car deliveries, with serious economic and social consequences,
has prompted Western politicians to recognise the strategic role of microelectronics in our society
as an essential lever for economic, technological, and social development. Microelectronics is the
enabling technology of our daily lives, which are increasingly and pervasively based on information
and communication tools and technologies. However, of the 1,000 billion chips produced each
year, three-quarters come from factories in the Far East, mainly in China, Taiwan, Korea, and
Japan. Europe’s share of chips produced on the continent has more than halved since the
beginning of the century.
Starting in 2022, ambitious public and private investment plans have rapidly emerged, namely the
European Union’s Chips Act and the CHIPS for America Act in the US, which aim to restore
production capacities that had migrated to the Far East in previous decades. This migration has
been facilitated by entrepreneurs capable of developing new business models, such as Morris
Chang at TSMC in Taiwan, and by the foresight of governments that have continuously supported
the development of advanced technologies through appropriate actions. Among these, the
Chinese government, at national and provincial levels, has taken on a leading and supportive role,
having already emphasised in 2014 the fundamental importance of developing a national
microelectronics industry, a point repeatedly reiterated by President Xi Jinping.
In Europe, we have been distracted (or thought it was not worth the effort to produce chips that
could be easily bought in a globalised world) for several decades. Now we are trying to make up
for lost time and, above all, lost know-how, with the European Commission’s ambitious goal of
bringing the share of chips produced in Europe on the global market back to 20%. Unfortunately,
we are starting from a low level, well below 10%, with a significant absence in technological nodes
below 10nm and in the markets for AI components, led by GPUs. At the same time, we remain
well-positioned in components for industrial and automotive applications, which, however, are
threatened by the invasion of Chinese electric cars. At the halfway point of the first five years of
the 2020s, the outlook is not rosy. Intel, on which Germany and Poland had placed high
expectations for factories dedicated to chip production and testing and assembly, respectively,
after announcing in mid-2023 that it would build these factories, decided in September 2024 to
postpone their construction for at least two years due to the serious problems afflicting it.
Confirming the company’s difficulties, Intel CEO Pat Gelsinger resigned on 1 December due to the
failure of his project to revitalise a company that has lost its technological leadership, investor
confidence, and, let’s not forget, the enthusiasm of its employees, who are facing the threat of
mass redundancies. At the time, critical voices were raised, including in Germany, about the
decision to rely on Intel but involve other players with advanced technologies, but they were not
listened to.
In Italy, investments have focused on two very different initiatives, which complement the
development of more scaled technologies for silicon integrated circuits (such as those planned in
Germany and France), but are no less important. In June 2024, Minister Urso announced a €3.2
billion project to build a Silicon Box factory in Novara, a “unicorn” start-up founded in Singapore
and dedicated to the assembly of silicon chips (chiplets) using innovative procedures. In Catania,
both a pilot line, involving the CNR and universities, and a full-scale 200 mm production line (with
£5 billion in investment) will be developed by STMicroelectronics for silicon carbide components, a
wide energy gap semiconductor whose importance is growing in line with the demand for efficient
electricity conversion systems, starting with the electric car and renewable energy markets. In
both cases, in 2024, the European Commission approved state funding to support the construction
of the facilities, which will also be privately financed by the companies involved and are expected
to be fully operational by 2033.
Unfortunately, but not surprisingly, in this case too, each European country has dealt separately
with private companies to attract investment for the construction of semiconductor factories,
competing with other European countries, without the capacity – or real possibility – of
coordination by the Brussels authorities. In this fragmented scenario, shaken by nationalist
pressures and at the mercy of decisions made by major players (the US and China, but also the
BRICS countries, which are emerging with India’s $15 billion investment), it is to be hoped that the
goal of increasing chip production in Europe will be maintained by the Commission and, above all,
by the various countries. The statements of principle – semiconductors are the basis of global
technological competition – repeatedly reiterated in Europe should be translated into a long-term
industrial policy, even in the face of temporarily unfavourable economic conditions. We should be
well aware of both the importance of the sector and its volatility – it declined in 2023 after the
2022 boom but recovered to 2023 levels last year, and forecasts are for growth in 2025. We have
already lost essential companies in the past due to political short-sightedness and corporate
limitations, and other countries have taken full advantage of this; we trust that this will not
happen again.
From this observatory, we will try to follow the technological and geopolitical evolution of the
semiconductor world: 2025 promises some fascinating developments, starting on 20 January.
Alessandro Paccagnella
