The European Union is normally reluctant to tamper with market forces, insisting that all economic operators compete on a level playing feed. State aid by member states is only approved by the European Commission in cases where vital projects would not likely be realised under market forces alone. But COVID-19 and current geopolitical developments have led to the identification of structural weaknesses in the Union’s industrial strategy.

The dependence of European manufacturers on supplies of microelectronic products across several industries is a vulnerability that poses societal challenges.

Such challenges are best addressed by flexibility in the EU’s competition rules. The concept of Important Projects of Common European Interest (IPCEI) is enshrined in the Treaty on the Functioning of the European Union.

Research in and production of electronic components have been identified as areas that need public support to ensure that the entire microelectronics value chain is reliably available to all European players. It is good news indeed that a Malta-based international company has qualified for public support at the EU and local levels.

STMicroelectronics (ST) is a global semiconductor company making microchips embedded in a host of advanced products from giant machines used in factories to the ordinary toothbrush you use every night. It operates manufacturing sites in several countries, having first set foot in Malta more than 40 years ago.

ST is now set to receive a multimillion funding package to upgrade its production lines as part of an EU initiative to boost microchip production in the Union. Without revealing the exact figure, government sources have told Times of Malta that the total amount to be given to ST is “huge”.

At a time when politicians are fretting about the urgent need to reform the country’s economic strategy, it is encouraging to see that Malta’s largest private employer, ST, is one of the economic operators at the cutting edge of global industrial excellence.

Understandably, Malta struggles to hit Union targets on research and development, one of the critical catalysts in the promotion of sustainable growth.

The US is dishing out billions of dollars to encourage chipmakers to build facilities in the US. The EU is doing the right thing by adopting similar strategies to build excellent microelectronics facilities in the Union

Small economies must participate with larger countries to support transnational cooperation projects with significant microelectronics synergies. ST is a vital building block in the Union’s strategy to maintain and further expand European competencies in this field.

The US and the EU are trying to build their strategic competencies so as not to depend so much on China’s primacy in industrial production, especially in critically important microelectronics products. This is evidence of the decline in enthusiasm for more globalisation.

The US is dishing out billions of dollars to encourage chipmakers to build facilities in the US. The EU is doing the right thing by adopting similar strategies to build excellent microelectronics facilities in the Union.

The IPCEI on Microelectronics, initially approved in 2018, brings together the entire wide-ranging family of microelectronics topics, including optic developments, hardware design, process knowledge, production facilities, chip manufacture and downstream applications in various industries. Technology companies, including SMEs and start-ups, can advance ambitious research, development and innovation measures with the government’s support. They can also invest in special equipment and construction to create conditions that can be used for many purposes in the long term. 

The use of public funds to help businesses find new ways of improving people’s lives through the use of more sophisticated technology is justified. It means investing in the future rather than bailing out the past. The spill-over effects of this act of faith in modern technology will benefit the microelectronics industry and society.