Chip Shortage Sparks War of Words Between Top EU Officials

(Bloomberg) -- France’s top European Union official took a thinly veiled swipe at EU antitrust chief Margrethe Vestager’s “naive” and “narrow-minded” stance in a clash over how to tackle a dearth in semiconductor supplies.

Thierry Breton, the European Commission’s internal market chief, said Friday the EU should grab the chance to become a global powerhouse for chips. His words echo a French push for more state funding to help European companies succeed internationally.

“Believing Europe should depend on others for chips is an illusion,” he said at an event in Dresden, Germany. “Believing we could be satisfied with the partial control of this strategic supply chain is naive” and “believing we should miss out” on producing for the EU and rest of the world “would be narrow-minded.”

Breton’s comments came just hours after Margrethe Vestager, the EU’s powerful antitrust chief, said “self-sufficiency is an illusion” and “no country and no company can do it alone.” She cautioned against huge unfocused subsidies that could see taxpayers pick up the bill for business risks.

The war of words highlights a split between France and Germany against the EU’s restrictive state aid rules as the region struggles with a shortage of chips for cars and devices. Both countries have called for more room to help their companies build innovative technology and catch up with Chinese rivals that get generous government help. 

Semiconductor shortages have forced European car plants to lay down tools and made politicians call for greater chip production in Europe. Governments have talked about spending billions of euros to expand chip production at home. Intel Corp. has discussed building a European plant if it secures state support.

Breton said Europe needed “full production capacity” and rules that allowed that to happen, a direct attack on Vestager’s control of subsidies. She can stop state aid judged to unfairly favor one firm over others.

The European Union would need to invest up to 330 billion euros ($378 billion) upfront to fully supply its own chip demands, Vestager said. Such a move would lead to “more expensive chips and a negative impact on all kinds of markets.”

Vestager has previously voiced skepticism at channeling funds to “very big” chip producers, echoing calls from smaller European chipmakers that they also need help to provide chips for industries hurt badly by shortages. 

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