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The European Chips Act will bolster Europe’s competitiveness and resilience in semiconductor technologies, contributing to the digital and green transition.
commission.europa.eu
The EU wants to double their share of the chip market. Will this lead to a collapse of the entire chip market as every power throws money at it? Any thoughts or comments on this would be appreciated? Will they have to wait in line for EUV and other equipment?
You are assuming that expressing the desire to do something and then throwing money at the task will produce effective new chip capacity. A lot of the expansion efforts adding new capacity seem not to have worked. For various reasons, including apparent widespread fraud. The EU might do better, but there's a very long way from wishing something to actually successfully realising it.
One point here is that governments take these decisions slowly and are slow to react. The semi market moves very fast. Private companies can - and do - respond very quickly to these changes. Just see how rapidly companies change their capex plans. That provides some correction to market cycles. Add goverenments into the decision making process and everything may slow down.
All this debate about state subsidies reminds me of Milton Friedman's famous quote about spending other people's money on stuff for other people - which is the chip subsidy scenario:
“There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government."
