SEMICONDUCTOR INDUSTRY ZVEI study: Semiconductor funding pays off economically

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Investments in the semiconductor industry are a rewarding investment for governments. This is one of the findings of the new ZVEI study, "From chips to opportunities: The importance and profitability of microelectronics funding."

“The funds allocated for microelectronics yield a high return,” explains the study author Tanjeff Schadt, a partner at Strategy&, PwC's global strategy consulting firm. The return is between 30 and 40 percent and the money invested is amortized after nine to twelve years. As a result of the promotion of microelectronics, the annual gross value added in Europe would increase by 33 billion euros and tax revenues would rise by 7.9 billion euros per year. Additionally, 65,000 new skilled jobs would be created in Europe, with 49,000 of those in Germany alone.

“These figures clearly show: the investment pays off and lays the foundation for Europe's competitiveness and innovative strength. Across the entire value chain, we see economic growth and job creation,” Schadt concludes. “Each direct job generates about six additional positions along the value chain, excluding jobs created due to increased competitiveness in related industries.”

Despite these positive effects, Germany and Europe must do more for the microelectronics industry. The study unequivocally states that the EU’s goal of achieving a 20 % global semiconductor capacity share by 2030 is unattainable. Even with current funding levels, the share is projected to decline from 8.1 % today to 5.9 % by 2045.

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“Europe risks being left behind and becoming a pawn in geopolitical power games if production capacities continue to decline,” warns ZVEI President Dr. Gunther Kegel. Because the microelectronics industry is critical to Europe's competitiveness and technological sovereignty, the EU must intensify its efforts.

Kegel stresses: “The current funding commitments can only be a first step, they must be expanded.” Europe only maintains a strong market position in the areas of power semiconductors, microcontrollers, and sensors, according to the ZVEI president, who further emphasizes: “To secure our position in global value chains, future funding should focus on existing strengths. Europe needs its own technological leverage that is indispensable on the international stage.”

Additionally, expanding funding to the microelectronics ecosystem is crucial. Kegel says: “We cannot afford further declines in our market share for PCBs and electronics manufacturing.” Unlike the US, the EU offers no funding for these industries. The EU’s global market share in PCB has historically shrunk significantly and is now below 5 %, with 85 - 90 % of global production volume located in China and Taiwan.

Chips: Key technology for achieving climate goals

The study also highlights the contribution that microelectronics makes to reducing CO2 emissions. "Semiconductors contribute to reducing emissions by a multiple of those produced during their manufacturing process," explains Andreas Urschitz. The ZVEI and Infineon board member sees significant opportunities to position Europe as a leader in climate technologies.

“Whether it’s photovoltaics, wind power, heat pumps, energy storage, or emission-free mobility: the demand for climate-friendly technologies will grow rapidly,” Urschitz continues. “The intended climate-neutral transformation of the economy and society is only possible with microelectronics. Semiconductors enable innovation, productivity progress, and thus the competitiveness of forward-looking industrial sectors such as automotive, renewable energy, grids, industrial automation, and many more.”

According to the study, the largest share of semiconductor demand required to meet climate goals – 80 % – is attributed to power semiconductors, which are needed almost everywhere for control and optimization. Achieving the EU's goal of climate neutrality by 2050 may require up to 25 % of anticipated European production capacities to be dedicated solely to climate - neutral electrification.

To better address the future needs of microelectronics, ZVEI has established a new platform for microelectronics. This platform aims to bring together relevant stakeholders and consolidate the industry's concerns. Andreas Urschitz will chair the platform.

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