Finland set to play an outsized role in revitalizing the European chip industry
The “Chips from the North” strategy unveiled recently highlights a promising opportunity for Finland's growth: local semiconductor companies are projected to triple their turnover to EUR 5–6 billion by 2035. Should this forecast hold true, the number of people working in the sector could increase from 7,000 to 20,000.
This growth is spurred by two main factors: the robust momentum of the global market and the strategic positioning of Finnish firms in high-demand segments. The global semiconductor market is expected to nearly double, reaching approximately one trillion euros by the decade's end.
The growth is spurred by two main factors: the robust momentum of the global market and the strategic positioning of Finnish firms in high-demand segments.
Digitalisation, the primary catalyst behind this market expansion, relies heavily on semiconductor technology. Semiconductors are integral to various products, including consumer electronics, transport vehicles, communication networks, industrial machinery, wind turbines, and other digitally enabled devices.
Additionally, specialized chips are crucial for developing and deploying generative AI models, contributing to the meteoric rise of companies like Nvidia, a graphics chip provider. Microchips are also vital for the green transition, offering solutions that enhance energy and resource efficiency.
Semiconductors: the backbone of strategic competitiveness
The pandemic and geopolitical tensions have exposed the fragility of global semiconductor supply chains. These chips are produced in intricate, optimized global networks, with no single country, region, or company dominating production.
In response, governments worldwide, recognizing the strategic importance of semiconductors for national security and economic success, have committed significant resources to support their domestic industries. It is thus no surprise that the European Union has also labeled advanced semiconductors as critical technologies within its economic security framework.
Semiconductors have become pivotal to Europe's strategic autonomy and competitiveness.
As a result, semiconductors have become pivotal to Europe's strategic autonomy and competitiveness. The EU's Chips Act, crafted in response to the COVID-19 pandemic, aims to double Europe's global semiconductor market share to 20% by 2030. Achieving this target would not only double the current share but, given the expanding global market, quadruple the current production volumes.
While ambitious—and perhaps daunting— the EU's goal underscores the unsustainable nature of the current situation. Since the early 2000s, Europe has seen a decline in its chip manufacturing capabilities and an increased reliance on external suppliers.
However, it is clear that Finland can play a significant role in revitalizing the European chip industry and enhancing economic security. Finland's potential benefits from both private and public investments in this sector are substantial.
Time to act
The newly developed industry strategy pinpoints six growth areas in Finland, all grounded in extensive research and education and world-class products. These areas include chip design, microelectromechanical systems and sensor innovations, photonics, quantum technologies, advanced semiconductor materials, and sustainable process technologies.
The strategy pinpoints six growth areas in Finland, all grounded in extensive research and education and world-class products.
Capitalizing on these opportunities demands decisive action tailored to the sector's demands for deep knowledge and significant investment. The strategy promotes the enhancement of R&D efforts, the improvement of labor quantity and quality, both domestically and internationally, and the attraction of investments to design and R&D centers and manufacturing facilities. While companies bear the primary responsibility for these initiatives, the government and universities are also key to driving growth.
For the strategy's successful execution, a tighter collaboration between the industry and its stakeholders is crucial, especially in terms of engaging with the EU and navigating an increasingly volatile business environment. Technology Industries of Finland's Semiconductor Branch Group provides a vital platform for this engagement.
The Finnish semiconductor sector uniquely combines significant growth potential, positive economic impacts, and a deep connection to EU technology and industrial policies. With such a hand, it is essential to play these cards wisely.
For more information:
Senior Advisor Joonas Mikkilä, Tel. +358 45 1296 791, joonas.mikkila@teknologiateollisuus.fi, X: @JoonasMikkila
