EU aims to beat US in chip race

European Commission announces funding to make the EU a world leader in chip manufacture

Europe's Digital Agenda Commissioner on Thursday set out plans for the E.U. to produce more micro- and nano-chips than the U.S. in the next seven years.

"I want to double our chip production to around 20 percent of global production. I want Europe to produce more chips in Europe than the United States produces domestically. It's a realistic goal if we channel our investments properly," said Commissioner Neelie Kroes as she announced a strategy to use public financing to supplement industry funding.

The strategy will see €5 billion(US$6.5 billion) in public funds going to R&D. Around 30 percent of that will come from the E.U. with the rest coming from national and regional funds and the European Investment Bank.

In a strategy paper published last December, companies and institutes in Europe's nanoelectronics sector promised to stump up €100 billion over the seven years if the E.U. kept its side of the bargain.

The paper was published by the CATRENE program, which has 347 partners from 19 European countries, together with AENEAS, a non-profit industry association whose members include ST Ericsson, ST Microelectronics, Infineon, ATMEL and Philips electronics.

They predicted that this €100 billion investment would increase their revenue by over €200 billion a year and create 250,000 jobs in Europe. Of that €100 billion, €15 billion is in capital expenditure and €85 billion in operational costs on major projects already in development.

The E.U. funds will be focused on seven specific locations that the Commission believes can deliver the most value quickly. "We're going for quality not quantity," said spokesman Ryan Heath. "We are funding only what is already excellent in world terms and which can be quickly reinforced."

The seven locations are Cambridge in the U.K., Carinthia in Austria, Dublin, Dresden, Milan, Grenoble in France and jointly Eindhoven in the Netherlands and Leuven in Belgium.

Europe currently accounts for about 50 percent of global production in electronics for automotives, about 40 percent for energy applications and about 35 percent for industrial automation.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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