The EU Gamble for semiconductor industry

Sam Fleming and others for Financial Times:

While semiconductors are a prerequisite for emerging technologies such as artificial intelligence, quantum computing and autonomous vehicles, it is mostly US or Taiwan companies that design and produce chipsets for these specific functions.

There is no European mobile system-on-a-chip of the type used in smartphones; no EU AI accelerator (the bit of the chip for machine learning) with substantial market share; and no European general purpose processor, graphic chip or data centre processor, Kleinhans points out.

This is a significant read and despite the negative undertones of the write up, it is essential to get some idea about how the subsidies are being poured in EU around manufacturing. EU is protective about its automobile sector, but as I have added the quote around absence of critical factors – no AI based chip or a system on chip for general purpose computing, it will be a tough ask.

My contention is hardware manufacturing requires the creation of ecosystems – just not the chips – you need to have several industries working in tandem to utilise the eventual benefit accruing from the chipsets themselves. You can have any number of projections from analysts about the requirements, but there is a distinct shift towards the AMR architecture that is more power efficient, and leaving the GPUs for “heavy lifting”.

For the same reason, I have been interested in the mechanics of photography, and not the images themselves. Despite the computational complexity, the onboard chipsets have excelled in complex hues. Likewise, for the set of images, investing in on-premises GPUs will make sense for cost-effectiveness.

Coming back to the ecosystems – EU has created several legal blocks around free use of data, and instead started probing the American technology companies. Despite the fines, the impact on market behaviour is zero. If you open up probes at the rate of one per week, I wonder if that has any meaning. The companies understand it is the cost of doing business, and data extraction goes unabated while creating elaborate privacy theatres around the operating systems.

I am watching this space closely.