EU’s Vestager Warns of Chip Subsidy Race as Intel Weighs Plant

(Bloomberg) -- Chipmakers may play off governments “against each other” for subsidies to fix semiconductor shortages, the European Union’s antitrust chief Margrethe Vestager warned.

While such action is tempting for companies in the current circumstances, it “risks letting taxpayers –- whether European or American -– pick up the bill, and get little from it,” she said in a speech in Leuven, Belgium on Friday.

Vestager’s words seem targeted at Intel Corp., which is chasing European support to help build more local chip capacity. European leaders have called for more investment to alleviate a supply shortage that’s rippled through several industries.

The Dane, who polices government funding for industry, said state aid can only be justified if necessary to start a project, if benefits are shared widely and without discrimination across the EU.

The European Union would need to invest up to 330 billion euros ($378 billion) upfront to fully supply its own chip demands, Vestager said. 

“Self sufficiency is an illusion” that would lead to “more expensive chips and a negative impact on all kinds of markets,” she said.

She called instead for a diversified supply chain with international efforts to assess vulnerabilities and early warnings for potential shortages. Co-ordinated export controls are also needed, she said, a reference to U.S. measures that some European officials have blamed for worsening chip shortages.

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