German Chancellor Angela Merkel on Wednesday expressed concern that Europe cannot make the semiconductor chips and batteries it needs to be able to compete for the production of vehicles as well as the development of smart appliances.
The Chancellor told a summit on the future of innovation in Germany that Europe risked falling behind in industries like quantum computing, chips and batteries, which are deemed paramount for the future of the car industry as it shifts to make more electric vehicles.
Merkel said “if a big bloc like the EU is not in position to create chips, I am not comfortable about that”.
“It is not good if you are a car nation and you can’t produce the core component,” she added.
Automakers have been struck hard by a global chip shortage after many cancelled orders when plants were idled during the COVID-19 pandemic. Meanwhile, demand for chips boomed from consumer electronics makers churning out premium devices for people stuck at home.
Merkel noted that if Europe loses the ability to make chips that are used in internet-connected devices then it makes itself very dependent, in particular on Asia.
“We need a global discussion about how much reliability we can give each other, or we will have higher costs if we develop something three times,” she said.
The EU has created a new alliance to support the local production and development of semiconductors in a bid to reduce the reliance on foreign suppliers, while U.S. President Joe Biden has proposed $50 billion to increase U.S. semiconductor production.