YieldHub founder on Ireland’s part in EU’s chip plans

‘There’s incredible capability here, but we sometimes miss opportunities to keep that value within the country,’ YieldHub founder says.

Millions of microscopic semiconductors make up the bedrock of the modern world. From computers, cars, phones and coffee machines, to guns and warships, these chips – found in practically all modern electronic devices – shape the world and determine where political and economic power lies.

In 2024, the semiconductor industry was valued at more than $580bn and estimates suggest that these chips are the world’s fourth most globally traded product, only after crude oil, refined oil and cars (an average car has more than a thousand of these chips fit inside them).

Global semiconductor sales this past June reached $59.9bn, growing 19.6pc compared to the same period last year.

The Americas and China accounted for a majority of these sales, with sales of $18.3bn and $17.1bn respectively, while Europe trailed behind at $4.4bn. Though Europe remains an important part of the ecosystem.

The chip supply chain is intricately connected through vines that travel through dozens of countries before ending up as a final product.

Countries worldwide specialise in manufacturing for different portions of the chip supply chain. For example, the US and Japan produce the largest share of semiconductor manufacturing equipment (SME), while the EU stands as the sole producer of certain key equipment in the form of Dutch company ASML’s advanced photolithography scanner devices.

Taiwan, on the other hand, produces around 90pc of the world’s most advanced semiconductors and China holds a strong position in the supply of raw materials.

It would be impossible to entirely localise chip production. Although, growing political tensions and lessons from a global chip shortage – one that was only made worse by a pandemic – meant that countries wanted to come up with ways to attempt to increase the production of this strategically vital product on their turf.

And so, the US came up with its Chips (short for Creating Helpful Incentives to Produce Semiconductors) and Science Act back in 2022, allocating $53bn in government subsidies and grants to drive chip R&D and manufacturing growth in the country.

More than $32bn of that funding has already been invested, with Intel receiving up to $8.5bn – the highest amount of direct funding offered under this scheme. Plus, since the Chips Act came into law, companies have announced more than $540bn in US semiconductor investments, which is projected to triple total US chip manufacturing capacity over the next decade.

Although, these “helpful incentives” also mean that funding recipients are barred – for a decade – from expanding chip manufacturing to China or any countries that the US thinks pose a threat.

And while president Donald Trump may not be a fan of the Biden-era Chips Act, he aims to achieve similar results through his heavy use of tariffs, including on semiconductors – the latest of which includes a 100pc levy on companies that do not have chip deals with the US. Though details on that front still remain unclear.

Competing with the US

Over on this side of the pond, the EU introduced its own Chips Act in 2023, which it hopes will increase the region’s share of global semiconductor production from 10pc to at least 20pc by the end of the decade. For this cause, the bloc has allocated more than $43bn in joint public and private sector investment.

A number of companies have received funding under this scheme, including STMicroelectronics, which will develop a wafer plant and an integrated silicon carbide manufacturing facility in Sicily and a new microchips manufacturing facility in France along with Global Foundries.

Funding has also been given to European Semiconductor Manufacturing Company (ESMC), a joint venture between TSMC, Bosch, Infineon and NXP, to set up a microchip manufacturing plant in Germany.

The region’s investment into semiconductors, is however, much less compared to other regions and, according to John O’Donnell, the founder and CEO of Irish multinational YieldHub, is “probably” not enough. YieldHub provides data analysis and yield management solutions to the semiconductor industry.

Earlier this year, a report by the European Court of Auditors (ECA) found that the EU would be unlikely to hit the 20pc target. According to the ECA member in charge of the audit, Annemie Turtelboom, the target was “essentially aspirational” and meeting it would require quadrupling the region’s production capacity – which it is nowhere near achieving.

Chip investments should be benchmarked per head and per gross domestic product (GDP), O’Donnell says, “and at least match the best, such as Japan”. Last year, Japan unveiled a $65bn plan to boost the country’s chip and AI industries through subsidies and incentives.

Plus, with just four odd years left until the end of the decade, Europe should accelerate investments and incentives for the entire supply chain, starting with wafer fabrication – one of the earliest stages of chip production, he says.

Although the region could not have expected the 15pc tariff on chip exports to the US. The effects of the tariffs are yet to be seen, with the levies just beginning to take effect. While other possibly negative developments include Intel’s closure of its European chip projects after a recent flat quarter.

However, aside from higher investments, training engineers and technicians in key semiconductor tech is also important, according to O’Donnell. Perhaps that’s where Ireland can come in.

Keeping value in Ireland

Ireland published its own semiconductor strategy this year, aiming to place itself as a strong player in this sector. As part of the strategy, the Government hopes to secure industrial investments, including for a regional edge fabrication facility, two trailing-edge foundries and an advanced packaging facility in the country.

Reports suggest that Ireland is planning to lure semiconductor giants such as Samsung and TSMC with an offer that includes billions in subsidies.

The strategy also includes plans to develop large-scale manufacturing sites with the necessary infrastructure, enhance R&D capacity and support businesses working in the semiconductor industry with commercialisation support and access to finance.

Moreover, the proposed efforts also aim to develop Irish leadership in semiconductors tied together with a skills study aimed at developing talent pipelines.

Ireland is home to 15 of the world’s top semiconductor companies (though many of them are not European) as well as Europe’s most advanced fab. This is because the country has a number of natural advantages, O’Donnell says, including the fact that English is the primary language here. This, of course, helps create a space for skilled workers from around the world to work in Ireland.

“Our time zone is another asset, enabling timely communication with both Asia and the US. And of course, being a politically stable country helps build trust with international partners.”

Long-term tax incentives have allowed for Ireland to create a space for chip multinationals, though O’Donnell argues for more tax benefits, especially for those leaving multinationals to start their own semiconductor businesses in Ireland.

“In parallel, providing tax incentives for multinationals based here and in Europe to prioritise Irish and European B2B suppliers over those from other parts of the world would further strengthen the industry in Europe.”

A growing number of chip companies in the country have also led to higher-educational institutions tailoring courses with the help of multinationals. Although, according to O’Donnell, the education system in the country is of late undervaluing electronics engineering when compared to finance or business. This, he says, is different from India, China and the US.

While issues such as housing and grid capacity, as well as clean energy generation, also need to be addressed.

Ireland’s contributions in the chip B2B space, as well as chip data analytics – areas where YieldHub specialises – and helping build R&D partnerships are key areas where the country can help further the EU’s chip goals, says O’Donnell, echoing ideas in the industrial strategy put forth by the Government.

“Together, these measures would boost employment in Ireland and across the EU within the semiconductor ecosystem.”

Companies such as YieldHub help semiconductor manufacturers maximise the percentage of the finished product that can be sold. While testing semiconductors is “no longer a thing in Ireland,” having moved over to Asia, the country does specialise in data science – which is key for companies such as O’Donnell’s.

“There’s incredible capability here, but we sometimes miss opportunities to keep that value within the country. Even keeping it within the EU would be great.”

The US’ barrage of “reciprocal” tariffs on the globe mean a “less global and more regional” semiconductor supply chain, O’Donnell says. According to him, some of the chip testing facilities that had migrated to Asia in the 1980s and 1990s are moving back to the US.

“This is a complex industry. It is also truly global and one expects it will exist and thrive well after any current administrations and their whims have been long gone.”

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