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Germany predicts chip investments of up to 50 billion euros in Europe

BERLIN (Reuters) - European countries are planning to support the local production of technology hardware with targeted aid that could result in overall investments of up to 50 billion euros ($60 billion), Germany said on Wednesday.

Germany, France and 17 other EU countries agreed to join forces to invest in processors and semiconductor technologies, key to internet-connected devices and data processing in a push to catch up with the United States and Asia.

Europe’s share of the 440 billion-euro global semiconductor market is around 10%, with the EU currently relying on chips made abroad. Such dependence on chips and other products has come under the spotlight during the COVID-19 pandemic.

German Economy Minister Peter Altmaier said during a virtual panel discussion with his French counterpart, Bruno Le Maire, he expected the European project, also known as Important Project of Common European Interest (IPCEI), to trigger overall investments in the chip industry of up to 50 billion euros.

“I assume that in all countries that are ready to take part in this IPCEI ... that we’ll clearly get together a double-digit billion euros amount - and not in the lower range but rather in the middle range,” Altmaier said.

“If this will be 50 billion euros at the end or if it’s going more into the direction of 20 billion euros, that’s beyond my predictions.”

Altmaier estimated that companies would contribute between 60% and 80% of the overall investments, with state subsidies from EU member states ranging between 20% and 40%.

A spokesman for chip maker Infineon Technologies welcomed Altmaier’s push to expand state aid.

The European Commission and member states should act quickly now as the plan could make a significant contribution to increasing Europe’s competitiveness and geopolitical resilience, the spokesman added.

Companies can apply for subsidies by sending their investment plans to the German economy ministry until March 1. The European Commission will then have a look at the individual projects, with a final decision expected later this year.

Germany and France have initiated similar projects in other sectors such as battery cells, cloud computing and artificial intelligence to make Europe less dependent on producers and tech giants from the United States and China.

($1 = 0.8317 euros)

Reporting by Michael Nienaber; Additional reporting by Douglas Busvine; Editing by Andrea Ricci and Steve Orlofsky

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