Europe falls behind in chip production

Good morning dear readers,

the success of big things often depends on the very small details. Anyone who has ever built an Ikea cupboard that ended up missing a screw knows what I’m talking about.

For the technology sector, that one little detail that makes all the difference is in the computer chips that drive the progress of the industry. Whereby “technology sector” is to be understood very broadly these days: Even modern cars, airplanes or washing machines stop driving, flying or skidding quickly without the chips.

This seems to be of great concern for Germany, as new figures from the supply chain specialist Everstream for the Handelsblatt illustrate: Because the chip factories of the future will probably be located primarily in the USA – because the American government heavily subsidizes its own industry.

While the US government provided $52.7 billion in state aid to the industry over the summer, Europe is still debating whether the industry needs subsidies at all. Gunther Kegel, President of the Association of the Electrical and Digital Industry, criticizes the sluggish progress in the EU: “It takes too long for us, the USA is a year and a half ahead.”

A year and a half, which is an eternity in the technological calendar. After all, the market is evolving rapidly. Above all against the background of a possible military conflict between China and Taiwan, two other large chip nations, the question of access to the precious semiconductors is likely to become the central question of the coming decades. So the local economy is heading straight into the next dependency trap on a key future asset. And that despite the fact that Europe had taken up the cause of more technological sovereignty.

We remain thematically in the USA, where the newly elected Congress is being constituted this Tuesday. The chambers of parliament in Washington are politically divided: as of today, the Republicans are in the majority in the House of Representatives, while the Democrats dominate in the Senate.

The new situation in the USA is also relevant for the rest of the world, because President Joe Biden is dependent on Congress for some key foreign policy challenges.

Washington correspondent Annett Meiritz recognizes three key geopolitical issues that the Congress will be instrumental in answering:

• How far will American support for Ukraine go?
• How hard will the course Washington be taking towards Beijing be?
• Does the nuclear deal with Iran still have a chance?

Read the analysis from Washington here.

There is bad news from the new President of the Conference of Ministers of Education, Berlin’s Social Democratic Education Senator Astrid-Sabine Busse. She assumes that the current students will no longer completely close the corona gaps during their school years. “We have to be realistic: we won’t be able to catch up completely,” says Busse.

An admission of educational policy that would probably be rated as “poor” rather than “satisfactory” in school. After all, for a long time the schools lacked the technical prerequisites and strategies on the part of politicians to prevent such a backlog from occurring in the first place.

New challenges are already waiting: This year, hundreds of thousands of Ukrainian students have to be integrated, while teachers are desperately needed everywhere.

There are also bad grades for Federal Transport Minister Volker Wissing (FDP). According to a report by the scientific service of the Bundestag, which is available to the Handelsblatt, the minister violates the requirements of the Climate Protection Act. The accusation: Wissing should have planned and informed more far-sightedly how his ministry intends to achieve the climate protection goals.

After the transport sector blew around three million tons more CO2 into the air in 2021 than actually required, Wissing presented a paper to compensate for the carbon dioxide excess by 2030. But that was not enough, according to the current assessment. Rather, the minister should have explained how he intends to achieve the remaining savings target by 2030.

But then Wissing would probably have had to mouth such ugly words as “speed limit” or “car toll”. Poison for the liberal soul. Instead, the FDP is aiming to spread the emission permits more widely across all ministries in order to protect the transport sector from far-reaching reforms.

Wissing’s cabinet colleague, Defense Minister Christine Lambrecht (SPD), has to deal with a storm of public abuse. Hanger of Outrage is a video address for the New Year that raises many questions.

Lambrecht is standing in the Berlin night, her words can hardly be understood because of the loud detonations of the firecrackers. In this setting, of all things, the minister talks about the war in Ukraine and recapitulates that for her many “special impressions” and “meetings with great people” were associated with it. Just as if she was reporting on a class reunion of 7c at the Albertus-Magnus-Gymnasium in Mannheim.

It is not known what the minister was thinking and why nobody apparently watched the video again before it was published. It is not only the impression that Lambrecht cannot deal with image and sound and freely improvises her speeches that is devastating.

What is particularly devastating is that after a year of war in Europe, the first thing that occurs to a German defense minister is that she has met so many nice people during this time. You do what Lambrecht should have done and remain speechless.

I wish you a good start into the day without any major thunderstorms.

It greets you cordially

your

Teresa Stiens
Editor of the Handelsblatt

PS: War, inflation and great uncertainty. The markets were in turmoil in 2022. We are interested in: Worried about your finances as you look ahead to the year ahead? Have your reserves suffered from the crisis? Which asset classes will you bet on in 2023 and why? Write us your opinion in five sentences on [email protected]. We will publish selected articles with attribution on Thursday in print and online.