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European Commission Launches $12 Billion Chip Support Campaign 111

Posted by timothy
from the there-would-be-this-thing-called-comparative-advantage dept.
An anonymous reader writes "Neelie Kroes, European Commission vice president responsible for the digital economy, wants to use 5 billion euros of European Union tax payers' money, together with matching funds from the chip industry, to recreate European success in semiconductors similar to that of Airbus. Because of its strategic importance to wealth creation Kroes wants Europe to reverse its decline in chip manufacturing and move back up from 10 percent to 20 percent of global production."
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European Commission Launches $12 Billion Chip Support Campaign

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  • by pablo_max (626328) on Saturday May 25, 2013 @05:50AM (#43820255)

    Assuming that what comes out of it is able to be used by ANY EU based (i.e. PAYING taxes here) firm. I think another stipulation to using any of the research money or outcome of said research should be that the firm which is also based on EU, must also produce the resulting products inside the EU. Not spending my money to gain a competitive advantage and then turn around and outsource all production to China or Brazil.
    Basically, if we are paying, we better get real benefits.

    • by Anonymous Coward

      Hi! Are you the guy who will release the 5 billion to the EC? I'm planning to start a new business, can you help me out? I just need a couple of hundred thousand euros. Pleeeeeeeaaase?

      • by pablo_max (626328)

        Hi back, jackass.

        I know it is difficult for you to understand this, but in the EU, things are a little bit different than in the United States. While corporations do have a lot of power here, it is nothing like what you see across the ocean. We, the voters, tend to react more more actively to things which we disagree with. Not in every case of course, but on the whole, this is true.
        So, in a way yes, I am that guy. I am tax paying, voting resident in the EU.

        • in the EU, things are a little bit different than in the United States. While corporations do have a lot of power here, it is nothing like what you see across the ocean

          That must explain why in the EU insolvent banks were taken into receivership instead of bailing them out to the detriment of citizens (e.g. Ireland).

      • So you're that Nigerian prince who keeps sending me investment opportunities?

    • by Rockoon (1252108)
      Ultimately this costs each EU citizen 10 euros each, on average.

      I always try to consider the scenario where instead of taxation funding it, that the government instead set up a government-managed corporation that issued and sold stock to fund the project, with a share of future profits going to shareholders.

      Some would say that this obviously doesnt work because otherwise a private corporation would already be doing it for the same purposes as the government project, however private corporations like to
      • by Teun (17872) on Saturday May 25, 2013 @07:15AM (#43820487) Homepage
        In the light of this proposal profit is more than direct return on investment.

        There might and will be benefits for society at large, people get jobs, knowledge is gained and other new ventures can develop.

        Those benefits don't show up in the books of investment bankers but are still very real.

      • by Anonymous Coward on Saturday May 25, 2013 @07:20AM (#43820507)

        It's not as simple as that.

        Improved infrastructure provides a moderate benefit to a great many individuals and businesses which can add up to a net profit for the country. This doesn't mean that it would have been a good investment for a private company to build the infrastructure, because it is not possible to capture all the value that the infrastructure creates. For example, a toll road operator doesn't get paid for the reduced pressure on surrounding roads, but the users of those roads still benefit.

        Similarly, this EU investment may make a net profit for the EU but that doesn't mean a corporation would make a profit doing the same thing.

        Or it may be a giant waste of money. But the fact it wouldn't work as a corporation tells us nothing either way.

      • by SomeKDEUser (1243392) on Saturday May 25, 2013 @08:02AM (#43820595)

        This is a really dumb way of thinking about how the government spends money. A corporation does not need to make a profit: it needs to make a profit now. And not just now, but also high enough.

        Governments are special in that they can finance things which bring in enormous profit in the very long run (fundamental research, very large infrastructure projects) or which have very large positive externalities (free roads). Without governments, you could not build dams: large ones become profitable after 50 years. No bank, no insurance company will accept such long-term risks: they may well not exist that long. Only countries can be reasonably certain of existing within such stretches of time.

        TL;DR; it is an essential function of governments to fund long-term, high-risk projects.

        • by drinkypoo (153816)

          Governments are special in that they can finance things which bring in enormous profit in the very long run (fundamental research, very large infrastructure projects) or which have very large positive externalities (free roads). Without governments, you could not build dams: large ones become profitable after 50 years.

          Governments are also special in that they can finance things with your money, the collection of which is backed by threat of violence. They're special in that they control media (at minimum by granting licenses) and thus have an unparalleled ability to influence public opinion. They can thus not only tell you what you are permitted to think, but they can influence most people into thinking it. For example, they've convinced you that building dams is a good idea in spite of the environmental impact, instead

          • Interesting, you compound your misunderstanding of the structure of government as understood since the Enlightenment with a misunderstanding of energy infrastructure, as understood from the early 20th and of the formation of public opinion (mid-twentieth).

            Governments, not democratic ones, and even not most autocratic ones are not sustained (only) by the threat of violence. The situation in Syria is illustration of that: although it is not actually possible to overthrow Assad, as he is ready to go to any ext

            • by drinkypoo (153816)

              Governments, not democratic ones, and even not most autocratic ones are not sustained (only) by the threat of violence.

              That is a load of dingo's kidneys. They are sustained against those who would tear them down only by the threat of violence, which underwrites all their other threats. It's not an unassailable position, but it's still how they work.

        • True. And that why it's a pity that modern democratic systems encourage the current party in power to focus no further than winning the next election. :/
      • by bhima (46039)

        Not every pursuit of man must be directly profitable... and demanding that they all be so, creates failure and market distortion.

      • by Opportunist (166417) on Saturday May 25, 2013 @12:39PM (#43821947)

        Private corporations are concerned with immediate success. They need to show something in their next quarter report or their stocks will fall. Things like investment in future endeavors is rare, and only risked if there's a chance to gain some sort of perpetual patent. But why bother with high investments in basic research when it's far more profitable to whip up some trivial patent of something even a dumb fuck in middle management could come up with?

        No, basic research, the research that actually does lead to groundbreaking results and exciting new technology is NEVER conducted by companies. Never. Remember the laser? You know, the thing that drives your DVD and BluRay drives? Think that was what the idea of Einstein when he whipped up the theoretic basis for it in 1917? Hell, even current patent laws don't allow you to milk it for a century. And no, this is NOT the suggestion that we should extend patents beyond the insanity copyright has already reached. But I ramble.

        A lot, and I really mean a LOT, of theoretic and practical research was necessary, from great minds like Ladenburg, Kastler, Basov and Maiman, and still it took the last one 'til the 1960s to produce a working laser, more than four decades after the theoretic foundation.

        You think any company on this planet would think in terms like this?

        You think any investor would invest in something that could take half a century to produce results you can market?

        Hell, it took 'til the 1980s to produce consumer grade lasers. And 'til the 1990s and even 2000s to make them cheap. Today, though, they're everywhere, from consumer electronics to cutting edge science, from micrometer distance measuring to touch-less cutting. And of course playing DVDs and BluRays.

        Think we'd have any of those things if we left innovation to the market?

      • Because Quaero, which was born out of this exact same idea and thought process, also which cost in the 12 digits, was such the raving success that politicians said it would be.

    • by bhima (46039)

      I suspect that if the results of this effort were released with an appropriate hybrid Open-Source license, as well as providing both the Open-Source contributors & corporate funders /contributors with some sort of tax break, that more European people and firms would see more benefits, than if the results were locked up in some sort of Airbus-esque version of Intel. Comparing the business strategy that Intel pursued with Itanium to ARM's, I become more certain in this line of thinking.

      Or to put it anoth

    • by AmiMoJo (196126) *

      TFA mentioned Airbus. The investment on that had paid off many many times over despite the aircraft design not being public property.

      This should be a conservative wet dream. The government wants a chip manufacturing industry but farms it out to the for-profit private sector.

    • by longk (2637033)

      ANY EU based firm.. which then funnels its profits elsewhere. Also to "produce" something in EU means what exactly? Assemble the final product? Solder the motherboards? A EU assembled phone with an EU produced CPU can't use Korean memory- and American graphics chips? The basic chemicals used must all come from Germany and be based on Norwegian oil? How far do you want to take this and to what effect?

      • I think that raw materials can be excluded simply on the basis that not all of them can be mined in Europe in the first place.
    • Not that there aren't lots of problems with these so-called "free trade" agreements that really aren't... but this would definitely be a violation and would justify sanctions (such as tariffs) from treaty member nations.

      What good does a "competitive advantage" do if the "profit advantage" is taken out of it?
  • If keeping our chip production costs more than losing it, then overally this is a bad investment. You could argue that electronics manufacturing is a strategic sector, but in this case we should simply make it a rule to only accept European electronics for security sensitive apllications. That would create a market for domestic production, and keep it alive at a much lower price.

    • by Bender_ (179208)

      The semiconductor industry is a bit different. No fab is ever build without massive government subsidies. Just google about globalfoundries in new york.

    • South Korea and Samsung would probably disagree with you.

  • by Anonymous Coward

    I know they don't do the fabrication, but how much EU tax payer money did ARM need? 50% of this will go to Brussels admin, 25% will go to local pork barrelling, and maybe 25% will end up in subsidising German engineering, which probably funds 50% of these Quangos to begin with.

    • Nope Brussels admin is actually somewhat cheaper, although US based lobbying is significantly adding to the cost. Most probably 20% will go into various random FP8 projects. And close to 80% will go to STMicroelectronics, Infineon, Accent, NXP, Inside Secure, etc... And of course ARM Holdings (a British company)... And the products will find their way into Automotive, Aeronotics and various other industrial domains. With a little bit of luck some of the funds will be used to do fundamental research in the
  • by Anonymous Coward

    If people are not allocating money to chip production it's because they can create more wealth DOING OTHER THINGS.

    All he will do is in a wholly unimaginative way is force wealth allocation back to a less productive industry because he can't imagine there might be something else which is even better.

  • by PolygamousRanchKid (1290638) on Saturday May 25, 2013 @06:15AM (#43820323)

    IBM used to produce chips in Sindelfingen, Germany. They shut it down a long time ago. On the other hand, Mercedes Benz automobiles are still rolling off the Daimler assembly line in Sindelfingen. So it's not like it's the location or lack of skilled workers or anything like that.

    So why is that . . . ? Of course, cars are not chips, despite the Slashdot penchant for car analogies. But it would be interesting to know why someone like IBM pulled out, before dumping a bunch of money on the problem . . .

    And what about Siemens . . . ? Do they still make chips . . . ?

    • by Nimatek (1836530) on Saturday May 25, 2013 @06:26AM (#43820359)
      Infineon Technologies (http://en.wikipedia.org/wiki/Infineon_Technologies), a Siemens spin-off do. They actually even have more facilities than listed on the wiki page.
    • Lots of them in places such as Grenoble valley ... (One of the IT historical grounds in the world)

      There used to be there labs from IBM, Bull and all those behemots from IT pioneer ages ;-)

      • by Bender_ (179208)

        They are still there. As well as several Infineon Fabs in Germany (Dresden, Regensburg, Warstein) and Austria (Villach), a massive fab by Globalfoundries in Dresden and a large fab by Intel in Ireland.

    • by Bender_ (179208)

      I am pretty sure IBM did not leave due to any reason directly related to the location. Semiconductor fabs can have a relatively short lifetime, depending on the technology. The IBM fab had been in operation for decades, if I am not mistaken.

      If you want a leading edge fab, it is quite possible that some technology changes (e.g. wafer size conversion) make it uneconomical to upgrade an existing fab. In that case you need to build a new shell. Locations for new fabs are often significantly influenced by incent

      • by tlambert (566799)

        I am pretty sure IBM did not leave due to any reason directly related to the location. Semiconductor fabs can have a relatively short lifetime, depending on the technology. The IBM fab had been in operation for decades, if I am not mistaken.

        If you want a leading edge fab, it is quite possible that some technology changes (e.g. wafer size conversion) make it uneconomical to upgrade an existing fab. In that case you need to build a new shell. Locations for new fabs are often significantly influenced by incentive payments from the local government. For example the new globalfoundries fab in new york state got billions of incentive payments. IBM most likely decided to discontinue the site after moving the products to a more modern fab that was build somewhere where they got more money...

        The German, French, and Irish foundries Are losing on feature size. X-Fab is limited to around 180nm features, and the most recent French STMicroelectronics plant can barely do 32nm for relatively small die sizes. Most design houses these days are fabless, and the feature size is a determining factor on cooling requirements and power consumption. Frankly, Intel makes better chips, and they are pretty much willing to fab for anyone these days, If you don't care because you're doing a slower ARM design,

    • by Anonymous Coward

      IBM left lots of market, at the root of the problem is IBM's patents, they found it easier to make patents of things than the things themselves and just become a big parasitic patent troll. This is why they announce battery initiatives (their Battery 500), not to make batteries, but to make plausible sounding patents in the field of batteries.

      IBM leaving a country doesn't mean anything, they've been pulling back from lots of real world projects and I doubt their fab work would continue without the supercomp

  • by Anonymous Coward

    don't forget Intel in Leixlip, Ireland - they seem to be doing ok

  • Because an Intel monopoly is the worst of all possible outcomes
  • by Anonymous Coward

    A lot of these chip manufacturers build commodity products that don't make much (if any) money. Most of the profit is concentrated at the top of the food chain with Intel, IBM, etc.

  • I was at an EU company which built a worldwide massive business based on what was in-house developed silicon - a chip - as crystallization point. The semiconductor capability was consecutively sold and innovations of a similar kind did not happen as far as I know thereafter.
  • As an example NY State gave $1.37 billion in financial incentives to GlobalFoundries in order for them to locate a plant there. These included $665 million in capital. That was one plant. Semiconductor manufacturing plants typically double in price with each manufacturing node generation. The commission wants to fund 450mm plants which will be a helluva more expensive. All those billions will probably only be enough to fund 2-3 leading edge fabs.

    Most of the money will likely go to GlobalFoundries and Siemen

  • Last time I checked Applied Materials was an American Company and had the whole fab business tied up globally... EU Pollies just Stoopid Social Slaves then OR paying back some of the billions they scamed from Intel and Microsoft ? ;)
  • I am not sure that Airbus could be created with today's EU treaties. State were a lot involved, something that today's EU fight like hell. And the EU cannot act instead of member states because it does not have their financial strength.

    Some would want to change that by having member states giving more money to the EU, but since the EU is totally antidemocratic and since EU leaders are not responsible at all before tax payers, I would prefer that problem to be fixed by reverting to the previous situation whe

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