Domestic chip production, a hot topic

Teledyne FLIR’s director of global business development for science and automation, Jerry Beeney, explains how thermal imaging is supporting global supply chains

Demand for microchips is surging and expected to double by 2030. The European Commission is supporting European production of semiconductor chips, via the EU Chips Act, to the tune of almost €22 billion.

Such investment in microchips is important because worldwide chip supply chains were heavily disrupted by Covid-19 lockdowns and labour restrictions, impacting manufacturing across virtually every industry. According to research by Goldman Sachs, 169 industries worldwide were affected by the widespread microchip shortage, a problem that cost millions and one the EU Chips Act will address at source.

The EU Chips Act came into force on 25 July 2023 and is designed to encourage innovation in microelectronics and increase the EU’s share of microchip production to 20 per cent in the next seven years. Put simply, the EU wants to significantly increase the number of companies globally that have the capacity to create microchips in-house, ensuring manufacturers are insulated from supply chain problems.

Linked to the Act is the vehicle to access the funding, known as the Important Project of Common European Interest in microelectronics and communication technologies (IPCEI ME/CT). The Act and Project combine to create an immediate incentive for European companies to shift focus from externally sourcing vital parts of their machinery to producing them in-house, with the support to facilitate this and the funding to boot.

Beyond the initial €8.1 billion state aid pledge, the move is expected to unlock a further €13.7 billion in private investment across 14 member countries: Austria, Czechia, Finland, France, Germany, Greece, Ireland, Italy, Malta, the Netherlands, Poland, Romania, Slovakia and Spain.

Investing in semiconductor chips on this scale is hoped to yield dual benefits. It will safeguard existing production lines from unpredictable supply chain impacts and fundamentally drive the development of technologies the chips power such as AI, quantum computing, 5G and 6G communications, autonomous driving and green technologies.

So far, 68 projects have been pledged across 56 companies, including global brands such as Vodafone, Infineon, Ericsson and GlobalFoundries. FLIR A6700-series cameras or FLIR A8580 MWIR will be crucial. Such technology lets testers detect any trace damage from power surges or malfunctioning components at every stage of the development cycle. It is an area that manufacturers should invest in shrewdly in the years ahead.