The European Commission announced plans to increase investments and incentives for its semiconductor industry and establish a more reliable chip supply chain to reduce dependence on foreign suppliers. The plans, which were announced Tuesday, are considered likely to lead to more export control measures over sensitive chip products in response to domestic shortages or unfair foreign trade policies. The U.S. Congress is trying to finalize funding for its own set of chip provisions to boost U.S. semiconductor production and R&D (see 2202040054).
Chip export news
The world’s top 10 semiconductor buyers increased their 2021 spending by 25.2% over 2020, reported Gartner Tuesday. The top 10 OEMs generated more than 42% of total market spending, it said. Apple, with 11.7% share of spending, and Samsung (7.8%) remained the top two buyers for 2021, while Lenovo took the No. 3 spot, said Gartner. BBK Electronics and Dell Technologies rounded out the top five. Huawei, with the No. 3 share in 2020, fell to No. 7, as it “struggled to buy chips” amid the Commerce Department’s export control restrictions, said Gartner. The semiconductor shortage prevented OEMs from meeting full production of vehicles and various electronic devices, but also significantly increased selling prices, “which meant OEMs spent much more on semiconductor procurement in 2021 than in prior years,” it said. Gartner estimates average selling prices of semiconductor chips increased 15% or more in 2021. “The semiconductor shortage also accelerated OEMs’ double booking and panic buying, causing a huge spike in their semiconductor spending,” said Gartner.
A European Commission proposal on semiconductors could emerge shortly, Internal Market Commissioner Thierry Breton said Monday in an online Politico interview. The European Chips Act is needed because Europe must be able to produce more on its soil and export more chips, he said. The EC wants to ensure the right level of R&D and have the appropriate level of cooperation between Europe and its partners, he said. It makes sense for the EU to spread its chip investment across the continent, but boosting chip manufacturing requires capacity, a good level of stable energy and other elements, so ramping up production must be done where those factors exist, he said. The EC announced an industrial alliance on microchips, and Breton was asked whether that alliance would welcome companies like Intel from outside Europe. Europe must first establish its own strategy, he said: Once that's done, players from elsewhere will be welcome. On the Digital Services Act (DSA) and Digital Markets Act (DMA), Breton hopes to conclude the measures under the current EU French presidency, which ends July 1. Three recent developments are worrying European telcos, said European Telecommunications Network Operators Association Director General Lise Fuhr, who hosted the event. They're starting to grasp the effects of global technical turmoil, which will affect Europe more than the U.S.; American companies have launched a new initiative to conquer the "metaverse"; and operators more clearly recognize how today's tech power becomes unrivaled economic power, as shown by Apple's revenue. But telcos have reasons for confidence in the EU, she said: It changed its approach to new technologies and is less naive about big tech, as shown by the DMA/DSA; it has started to see the correlation between big tech and green issues; and policymakers are starting to view the tech sector as a growth industry rather than something to squeeze for revenue. Nevertheless, she warned, ETNO's reasons to be confident don't relieve its concerns.
Qualcomm supports “targeted and rule-based export controls” as one of several long-term federal policy recommendations for curing the semiconductor shortage, it said in comments posted Wednesday in docket BIS-2021-0036. Submissions were due Nov. 8 in the Bureau of Industry and Security's request for information to help the secretaries of Commerce and Homeland Security prepare a report to the White House on the chip crunch by the one-year anniversary of President Joe Biden’s Feb. 24 executive order (see 2109230038).
Tech companies and trade associations favor working more closely with U.S. trade partners to diversify information and communications technology supply chains and make them more resilient to disruption and bottlenecks, several commented Thursday in BIS-2021-0021. The Commerce Department’s Bureau of Industry and Security sought comment to help the secretaries of Commerce and Homeland Security prepare a report to the White House on supply chain disruptions in the “critical sectors and subsectors” of the ICT “industrial base” by the one-year anniversary of President Joe Biden’s Feb. 24 executive order (see 2109170042).
China was the unmentioned presence lurking among participants in the inaugural meeting Wednesday in Pittsburgh of the U.S.-EU Trade and Technology Council (see 2109290006), agreed panelists on a Center for Strategic and International Studies webinar Friday to discuss key takeaways. They agreed the meeting was a moderate success for setting in motion 10 working groups to address specific tasks before the TTC meets again in the spring.
Stakeholders unveiled their wish lists for the EU-U.S. Trade and Technology Council, before the TTC's first meeting Wednesday in Pittsburgh. The council had planned to approve an agreement on the way forward at the meeting, the European Commission told us. The joint EU-U.S. TTC statement sets out five areas of joint work -- investment screening, export controls, AI, semiconductors and global trade challenges -- and establishes 10 working groups. The export control panel will hold a joint virtual event for stakeholders Oct. 27. The American Chamber of Commerce for the EU set out priorities Tuesday for working groups it expects to be established. It seeks a "transparent and open stakeholder engagement mechanism" to ensure outcomes are supported by business. The European Consumer Organisation said consumer groups "support the voluntary exchange of best practices and information between regulators" as long as it doesn't weaken EU ambitions to better safeguard consumers. It said the EU recently tried to improve the transparency of its cooperation with third countries: "This is a positive process that should continue." The Information Technology Industry Council made requests, saying the TTC's work "can be best supported by a successor agreement to the Privacy Shield." Chips "should top the EU-US partnership agenda," Intel blogged.
The Commerce Department's Bureau of Industry and Security is “very busy” working to implement semiconductor supply chain recommendations from the White House in June stemming from President Joe Biden’s Feb. 24 executive order on the chips shortage and other supply-chain issues, said Sahar Hafeez, a senior BIS adviser. The agency is studying closer federal collaboration with industry on semiconductor demand and supply and is reviewing how export controls and investment restrictions might exacerbate supply-chain problems, Hafeez told an Information Systems Technical Advisory Committee meeting Wednesday. Perhaps the most immediate priority for Commerce is pushing Congress to pass and fund the Chips Act, she said. The bill, which would provide funding and incentives for U.S. semiconductor R&D and manufacturing, has been funded by the Senate but hasn't been approved in the House (see 2107220005). “We're laser focused on the House, and we encourage you all to help us get that across the finish line,” Hafeez told the ISTAC. She said Commerce is “cautiously optimistic” the House will approve funding. Though the global chip shortage has persisted for months, it still remains unclear to BIS which chips are most severely affected, Hafeez said. She said “mature node chips” are being “severely impacted,” but the shortage is affecting newer nodes as well, she said: “We've been trying to get more clarity. I don't know if it exists, That's an issue that we're grappling with -- the lack of transparency.”
A Hollywood Hills, California, electrical engineer was sentenced Thursday to 63 months in federal prison for his role in a scheme to illegally export chips with military uses to China, in violation of the International Emergency Economic Powers Act and the Export Administration Regulations, said DOJ. Yi-Chi Shih, 66, was convicted July 2 and ordered to pay the IRS $362,698 in restitution for lying to the agency about his foreign assets, and also was fined $300,000. Shih defrauded a U.S. manufacturer of high-power broadband chips to gain access to the company’s confidential and proprietary business information, then used an accomplice posing as a domestic customer to buy the chips for U.S. use, said DOJ. “Shih concealed his true intent to export.” Attempts to reach Shih’s lawyers for comment Friday were unsuccessful.
FedEx expects the U.S. domestic parcel market to surpass 107 million packages a day in calendar 2022, with e-commerce “contributing 88% of total U.S. market growth,” said Chief Marketing and Communication Officer Brie Carere on an earnings call Thursday for fiscal Q4 and 2021 ended May 31. Excluding Amazon volume, the U.S. domestic parcel market is expected to be 72 million packages a day in calendar 2022, she said. “We forecast that the U.S. domestic parcel market will reach 172 million packages a day in calendar year 2026.”