These companies will benefit significantly from increased investment if the EU continues with its proposed plans to establish a local semiconductor supply chain. (NASDAQ:NXPI), as well as ASML Holding NV (ASML.AS), a major producer of semiconductor manufacturing equipment. The leading European semiconductor manufacturers, including STMicroelectronics NV (EPA:STM), Infineon Technologies AG (ETR:IFX), and NXP Semiconductors N.V. The European Chips Act aims to mobilize over €43 billion in public and private investments for the sector, with the ultimate goal of achieving a production capacity that caters to 20% of the global market by 2030. Semiconductors are a crucial component of modern technology however, the majority of suppliers to European companies in the semiconductor industry are based outside of the EU, which poses a risk for the region in times of semiconductor shortage. However, in the same year, a single US-based company, Apple Inc. (NYSE:AAPL), exceeded $2 trillion in market capitalization, highlighting the considerable dominance between the US and European tech sectors in terms of market value.ĮU recently moved to pass the Chips Act to overcome the problem of semiconductor shortage. According to Atomico‘s 2022 report, the combined value of all public and private European tech firms was $2.7 trillion. Specifically, European companies exhibit slower growth rates, lower returns, and lower levels of investment in R&D when compared to their US counterparts. Additionally, the consulting firm’s report indicates that although Europe has several high-performing companies, the region, as a whole, underperforms in the tech sector relative to its counterparts in other major regions. McKinsey‘s research into this “technology gap” identifies ten different types of technologies and reveals that Europe leads on only two of the ten. However, it is a commonly acknowledged fact that the tech sector in Europe lags behind its American and even Chinese counterparts in terms of competitiveness. According to a Deloitte Report published in 2022, the technology industry in Europe recorded sales of €1.5 trillion, accounting for more than 8% of the region’s economic output.
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