EU invests $142M in Dutch photonic chip factory

• The EU will invest 133 million euros (around 142 million USD) in a pilot photonic semiconductor facility in the Netherlands.
• This €380 million European semiconductor initiative, through the “Chips Joint Undertaking,” aims to promote photonic semiconductor production and innovation across the EU.

What happened

The Dutch Ministry of Economic Affairs announced on Monday that the EU will invest €133 million (about $142 million) in a pilot photonic semiconductor production facility in the Netherlands. This investment forms part of a €380 million European semiconductor development plan, which aims to promote photonic semiconductor production and innovation across the EU through the “Chips Joint Undertaking.” This public-private partnership supports research and development within the semiconductor industry.

Photonics chip technology uses light instead of electrons for data processing, bringing advantages in speed and energy efficiency. This makes it highly useful in high-tech sectors such as data centres and automotive applications. Dutch Minister of Economic Affairs Dirk Beeljaarts emphasised photonics’ strategic importance, noting that Europe aims to keep its competitive edge in knowledge, innovation, and supply chains. Last year, senior executives from top companies in the European photonic chip sector urged the EU to provide €4.25 billion in funding to help the industry compete globally with the US and Asia. In September, former European Central Bank President Mario Draghi stressed that, as global economic friction grows, the EU must increase its financial investments and speed up efforts to stay economically competitive.

Construction of the Dutch photonic chip factory is expected to begin in 2025. Eindhoven University of Technology, the University of Twente, and research institute TNO are leading the project, which is attracting investments from related companies.

Also read: Dutch chipmaking firm VDL to build semiconductor parts factory in Vietnam  

Also read: Semiconductor body calls for EU ‘Chips Envoy’, more support

Why it is important

Photonic chip technology is an emerging semiconductor field that uses light instead of electrons for data processing, offering advantages in terms of high speed and low energy consumption. This EU investment will promote the research and production of this technology, potentially establishing a competitive edge for Europe in the global chip market. Moreover, photonic chips are becoming increasingly important in applications such as data centres and automobiles, while the current semiconductor supply chain faces geopolitical uncertainties. This move can help the EU reduce its dependence on supplies from Asia and the United States, enhance technological autonomy, and strengthen economic security.

In response to significant investments by the United States and China in the chip sector, a report by former European Central Bank President Mario Draghi also calls for increased EU investment to keep pace in the technological competition. This investment is a step towards that goal, demonstrating the EU’s determination to secure a place in the global technological competition landscape.