Collaboration Is Essential for the West to Catch up on Technology and Ensure the Future of Democracy
Governments in both the United States and European Union are waking up to the fact that they need to take their countries’ lack of semiconductor manufacturing capacity seriously. This is good news as, absent any coordinated efforts at a national level, both regions have seen their share of the microchips market slip away.
However, the key here is “national level”—many of these programs are still taking place in isolation without cross-border intelligence sharing. This follows a decades-long precedent of nations closely guarding their technological advances.
For the West to lead in innovation and manufacturing this critical sector, allied nations will have to collaborate more closely.
Big Hill to Climb
Both the U.S. and EU have ceded vast amounts of their market share in semiconductor manufacturing. After controlling 37 percent of global chip production in 1990, the U.S. currently only accounts for 12 percent of the world's supply while the EU’s share is even lower at 10 percent.
The CHIPS for America Act and European Chips Act are exciting policy advancements that represent a substantial move forward in investing in microchip manufacturing. They were developed after both regions realized that leading in semiconductor innovation and production is essential to ensuring national security.
But the U.S. and EU need to think more broadly in terms of national security than just their own borders. While these two programs will spark innovation in both regions, the West will be able to make up its semiconductor deficit much more quickly through information sharing and collaboration.
Reminder from Russia
The rise of authoritarianism and today’s increasingly adversarial geopolitical situation highlight the need for the U.S. and EU to partner on innovation and critical infrastructure development.
Russia’s invasion of Ukraine immediately threw upheaval into global food security as well as the EU’s access to oil and natural gas. The conflict has brought the West closer and forced the U.S. and EU to focus on how they coordinate a joint response to a major conflict when critical raw materials and the future of democracy are in question.
A similar peril could easily impact semiconductors, with Western countries forced to scramble after their supply of microchips is disrupted. With so much of semiconductor manufacturing located outside of the West, there are innumerable scenarios in which the U.S. and EU could be cut off from this critical supply in the future.
However, ramping up semiconductor production cannot happen overnight. It requires having the necessary infrastructure, supply chain, workforce, R&D, and the ability to bridge the gap from research to concept to application and ultimately production.
Encouraging Signs on the Horizon
Along with legislation, there are additional encouraging signs that the U.S. and EU are building the infrastructure required to lead in semiconductor manufacturing.
In Belgium, IMEC is bringing together government, industry, and academia to advance innovations in semiconductor technology. In the U.S., the State University of New York’s Albany Nanotech Complex is a similar enterprise and anchors the American Semiconductor Innovation Coalition, consisting of leading institutions and semiconductor companies nationwide. The CHIPS Act provides an opportunity to marry these two collaborative efforts to create a continuum of technology development and learning between the world’s preeminent institutions.
These initiatives are worthwhile but would be more effective working in concert rather than independent of one another. Policymakers traditionally resist investments in technology development when they may benefit other nations. We must move beyond that instinct and enter into agreements that promote in-kind investments by allied countries in which technologies can be shared and then protected from export to foreign adversaries. By reaching a formal agreement between the U.S. and EU member states, we could ensure the current voluntary protections become a matter of law that can stand against commercial inclinations to export to foreign rivals for a profit.
The CHIPS for America Act represents the first time the U.S. has endeavored to establish an industrial policy to incentivize growth and innovation in the semiconductor industry. It provides a unique opportunity to entwine American policy with similar activities of allied nations.
Moreover, freedom and democracy globally are under their greatest attack since the 1940s. The U.S., EU, and their allies have an opportunity to work together in the research, design, development, and production of technologies that will determine global leadership and their national security for decades to come. Both U.S. and EU “CHIPS” programs must not only allow, but also facilitate the collaboration between allied nations if we are to secure freedom for future generations.
Mike Russo is President and CEO of the National Institute of Innovation & Technology (NIIT) and an expert on advanced manufacturing and innovation policy. Charles Wessner is a senior adviser (non-resident) with the Renewing American Innovation Project at the Center for Strategic and International Studies (CSIS).