EU’s Vestager Warns Against Relying on ‘Very Big Chip Producers’

(Bloomberg) -- The European Union should guard against relying on a handful of “very big” chip producers as it weighs billions of euros of potential investment in semiconductors, the bloc’s digital policy chief Margrethe Vestager told Bloomberg TV.

European leaders have called for more investment to alleviate a supply shortage that’s rippled through several industries, and companies like California-based Intel Corp. have been chasing European support to help increase local capacity. 

But Vestager, who’s also in charge of competition matters, showed skepticism about funding for production facilities, saying support for semiconductors needs to aim instead for “a much more diversified supply chain.”

“It’s important that we focus on the global market” and “that also European production is meant for a global market, because we get the right competitive pressure,” she said in an interview in Strasbourg, France on Wednesday. “We cannot just have it that we depend on very few, very big chip producers.”

Intel’s smaller European rivals Infineon Technologies AG and STMicroelectronics NV have also expressed doubts about a push for cutting-edge chips, instead of serving up less-advanced semiconductors needed for automotive, industrial and internet-of-things production.

Vestager’s comments come as chip shortages ripple through industry after industry -- preventing companies from fulfilling demand for products from cars to game consoles and refrigerators. In response, the EU wants to double its chip production to at least 20% of global supply in the next decade.

European Commission President Ursula von der Leyen called for substantial investment in the semiconductor industry earlier on Wednesday. She said the European Commission would present a new European Chips Act in the coming weeks aimed at linking together world-class research, design, testing and production capabilities.

Vestager is also examining Nvidia Corp.’s bid for U.K.-based chip developer Arm Ltd. Rivals and customers have complained about how the new ownership could alter Arm’s neutral role as the Switzerland of the semiconductor industry in licensing chip designs widely.

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