A survey by the digital association Bitkom shows that German companies are particularly concerned about dependencies on China and the USA.
Without semiconductor chips, a large part of our modern daily life would come to a halt. Smartphones, washing machines, data centers, cars, and much more would not function without these tiny high-tech components. The fragility of global supply chains became especially apparent during the so-called chip crisis amid the COVID-19 pandemic. Even several years later, the supply situation still appears far from secure, according to a survey (in German language) by the digital association Bitkom.
The survey found that 92 percent of companies that work intensively with semiconductors fear that the conflict between China and Taiwan could threaten supply in Germany. In addition, 62 percent have little or no trust in the USA as a supplier of semiconductor chips. The reason for these concerns is the high dependence on these two countries: in the current year, 72 percent of the surveyed German companies purchased their chips from the U.S. or plan to do so, while 63 percent cited China as a source country. Germany follows with 54 percent, Japan with 36 percent, and Taiwan with 28 percent.
67 Percent Struggle With Export or Import Restrictions
Procurement problems such as delivery delays and price increases were reported by 96 and 91 percent, respectively. 67 percent face export or import restrictions. As previously reported, raw materials giant China has imposed strict export controls on several materials relevant to chip manufacturing, including gallium and germanium, as well as rare earth elements. In response to the ongoing chip shortage, the surveyed companies have primarily stockpiled chips, entered into long-term agreements with suppliers, or diversified their supply chains.
In addition to their own initiatives, they are also calling for more political support. For example, 90 percent argue that Germany must reduce one-sided dependencies in semiconductor supply. More European manufacturing capacity and strategic partnerships are needed for this, explains Bitkom President Dr. Ralf Wintergerst. To strengthen the entire value chain, fiscal and policy incentives, reliable regulatory conditions, and reduced bureaucracy could all contribute.
EU Measures to Strengthen the Domestic Chip Industry Under Criticism
These are the improvement measures that the EU had already announced in 2022 with its Chips Act. The legislation aims to achieve a 20 percent share of global chip production by 2030. However, the plan—and especially its implementation—has repeatedly faced criticism, including from the European Court of Auditors. Recently, the Semicon Coalition, an EU-wide initiative to strengthen the domestic semiconductor industry, also judged the targets as unrealistic and called for a revision of the Chips Act (PDF).
Meanwhile, in Germany, the planned construction of semiconductor factories by the U.S. companies Intel and Wolfspeed, which were supposed to benefit from subsidies from both countries, has been canceled or postponed. Reasons cited include the difficult market situation, economic risks, and growing geopolitical challenges.
Photo: D-Keine via Canva