Put a chip in the engine. Meanwhile, let’s keep the factories – Corriere.it

Italy: 1966. A well-known American oil company, Esso, launches an advertising campaign that will remain in the pop imaginary of the country. Put a tiger in the engine. The children were given a plastic tiger, the fathers and the few mothers who at the time drove a tail to attach to the rearview mirror. Today that lucky pun would result in a question: How many gigaFlops does your machine’s processor have ?. We are preparing for a revolution in mobility where we will no longer look at horses, but we will take into account, it should be said, the computing power that the machine will have. Cars will become an electric motor, four wheels, a battery and a super computer with a microchip. That slogan will become Put a chip in the engine.

The change comes downstream of one of the deepest chip supply crises, due to the discontinuity caused first by Covid and then by the change in the global supply chains. If the US has devoted $ 52 billion to boost domestic chip production, Europe will not be outdone. Not only for the traditional, by now, attention to digital and the transformations produced by it. But also for the commitment and speed with which the Commission intervened at the first signs of interruption in the supply chain. By developing a strategy based on three pillars: research on the most advanced chips, investment in the factories that will have to build them and a coordination mechanism between countries in times of crisis. The European Chip Act twin of the American one. In the United States entered the implementation phase. In February, the EU Commission presented the plan which is now under discussion in the Parliament and the Council.

The paradox

The goal is to reach 20% of the value of world production in Europe by 2030. This means quadrupling the number of chips that will come out of factories in Europe, while in the world, production will probably double in the same period. A goal as challenging as necessary. Europe is experiencing a paradox. The continent has the most advanced research centers in the world, but we have not invested enough in the development of capacity and the design of increasingly sophisticated chips. The first pillar of the Chip Act on investment in research and development of the most advanced chips. The level of technology of a processor is expressed by the size of its transistors measured in nanometers (one billionth of a meter). Thinner and more powerful, the processor increases computing performance and energy efficiency as transistor density increases. The processors of advanced smartphones are four to five nanos thick and the new frontier is two nanometers: in comparison a thin slice of salami the Empire State Building, a hair a 30-story building and a virus the size of a whale.

The second pillar of the Chip Act are factories in Europe. A clarification, first of all. In Europe, public investment must be seen under the acute lens of the rules on state aid which serve to avoid competition between European countries. The fundamental aim is to avoid creating asymmetries between more or less rich countries. Verification of this rule entrusted directly to the Commission.

The Treaty of the European Union says therefore that essential investments for the supply of industry are in the common interest. In these cases there can be public aid by relying on the minimum necessary discretion of the Commission. In itself, public aid stops being a tab, especially since Japan and the US, as we have seen, have moved in this direction. With one more point, what the Chip Act calls First of a kind. We must speak of a factory that brings added value, innovation or industrial processes that were not there before in Europe, which change the chip supply chain in a structural and profound way.

The Chip Act significantly streamlines the procedures for obtaining building permits for new factories. This is an important point: when the industrial future of Europe is at stake, the bureaucratic delays are not tolerable and incidentally this also applies to the installation of renewable energy sources.

The third pillar of the Chip Act is that much discussed today also on the issues of energy and solidarity: the ability to react in the event of a crisis. We hope to never get there, but a supply crisis could occur that could affect the equipment used for hospitals or energy infrastructures. Europe must be able to organize itself. The first time he did it with vaccines. Today the proposal on the table for energy. With the Chip Act we want to be prepared to face the crisis before it occurs.

Investments

Important investments are arriving in France, Germany, Italy and many other EU countries and we are only at the beginning. To have a measure, Intel intends to invest several billions in Europe and in particular in Italy in a back-end factory that assembles the chips, one of the processes with the highest technological value. Stm, the Italian-French giant, is also investing. In Catania, with the support of Europe, it will build a wafer plant of silicon carbide, a material used to produce the chips used in electric vehicles and for renewable energy. In addition, in France, with the American Global Foundries, it will invest in the production of advanced chips that are particularly efficient in energy consumption.

For a long time the factories had entered a cone of shadow. Globalization had deluded us that we could have them scattered around the world, and that production could take place in Asia at lower costs. The crises of recent years have shown us the opposite. Europe does not produce advanced processors and the same is true for the US, which exposes the world value chain to excessive dependence.

Factories are fundamental elements of our civilization, of our society, of the future. We almost forgot about it. But an oversight that concerns not only the chips, which are perhaps one of the most sensational cases. We risk being a giant with feet of clay. It took a pandemic to wake us up dramatically. Globalization 1.0 was the apotheosis of just-in-time manufacturing and outsourcing. Companies needed to reduce inventory to zero and rely on third parties for manufacturing. We have realized how risky the lack of supply is. This applies not only to chips, but also to raw materials. Tesla and Apple are proof of this. They both design their own processors in-house. The effort that we will have to make will be to use the data and design and produce the most advanced chips to make the best products, because if an addiction is created now, the car of the future will take destinations other than Europe with serious repercussions also in terms of occupation.

The thin red line

Here is the common thread that binds chips, the car of the future, raw materials such as lithium used for batteries or neodymium and cobalt for electric motors. This is the direction that Europe has in mind: thinking about the future. Even the last liberal in the world has understood that we do not live on page one of the economics textbooks, the perfect market. We are not talking about self-sufficiency but about responsibility. The expression European digital sovereignty that scares someone does not mean digital hostility towards others, it means awareness of one’s own means, of one’s limits. Sovereignty does not mean isolation. Europe and the US have established a Trade and Technology Council: a mechanism that looks to the strengthening of technological cooperation including the issues we are talking about in this episode, semiconductors, raw materials, issues in which we both have an interest that the world goes the right way, that way of democracy, of stability. The European digital market is the richest in the world and to quote Thierry Breton: Europe is the largest democracy in the world and also the oldest, this gives us more strength but also more responsibility

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