(Bloomberg) — Europe was naive to outsource so much of its semiconductor design and manufacturing to other regions and needs to redress the balance, the European Union’s top industry official said.Industry Commissioner Thierry Breton said a global chip shortage that’s disrupting the car industry and supplies of electronic goods is proof that it’s time to act.“We want to come back to our former market share of production for the needs of our industry,” Breton said in an interview with Bloomberg News. Europe’s share of semiconductor manufacturing has dropped over the years because the region has been “too naive, too open,” he said.The European Commission, the EU’s executive body, laid out plans Wednesday to diversify supply chains and carry out regular sector reviews to tackle its lack of industrial independence in strategic areas including semiconductors.An analysis it published at the same time showed the region’s semiconductor supply chain is increasingly vulnerable to high barriers to entry in key industries, as well as trade tensions and a heavy reliance on Asian advanced chip manufacturing and U.S. chip design tools.The EU’s response should focus on clawing back design and production of semiconductors that power data processing, communication, infrastructure and artificial intelligence, the paper said.The commission plans to double chip production to at least 20% of world supply by 2030. Breton is trying to rally Europe’s leading chipmakers, research centers and more than a dozen EU governments behind the plans. At least 22 countries have already signed a letter of intent.The alliance will have to decide how to boost the design and production of 20-nanometer to 10-nanometer chips, which are smaller and more powerful than most that are currently manufactured in Europe, Breton said. Advances in manufacturing are measured in nanometers, or billionths of a meter, with smaller and smaller transistors crammed onto silicon wafers.In parallel, the EU will work on plans to produce the next generation of leading-edge chips by 2030. Officials are targeting production below 5-nanometers down to 2-nanometers, an ambitious goal not yet reached by industry leaders Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co.Uphill BattleProducing even 20nm chips will be a challenge for most European semiconductor companies, which have long outsourced production at that scale, said Jan-Peter Kleinhans, head of technology and geopolitics at think tank Stiftung Neue Verantwortung. He said the companies’ automotive and industrial customers may need to be willing to pay more for chips “made in the EU.”And not all European chip companies are keen to sign up to the EU’s plans. STMicroelectronics NV Chief Executive Officer Jean-Marc Chery told BFM TV on Tuesday his firm was unlikely to join the alliance.“If it’s about advanced technologies, we don’t have any reason to participate. That’s marginal to our activities,” said Chery.Europe once accounted for a big chunk of semiconductor manufacturing, but that’s collapsed from a global market share of around 44% in 1990 to closer to 10% today. Taiwan, South Korea and Japan account for about 60% of production, according to the Boston Consulting Group and the Semiconductor Industry Association. European chip designers including NXP Semiconductors NV and Infineon Technologies AG now outsource most production to TSMC and other foundry operators. The decline partly reflects the waning of Europe’s consumer technology sector, including the failure of Nokia Corp. and Ericsson AB’s once-popular mobile phones, according to Kleinhans.Now Europe’s auto industry has been hit hard by the global chip shortage. Ford Motor Co. said Monday it would halt output at German plants for several weeks due to a chip shortage, joining a growing list of manufacturers idling factories.While the EU’s semiconductor strategy is aimed at cutting reliance on foreign suppliers, its plan to go below 5 nanometers is so ambitious that the bloc will need help from those same players. Companies like TSMC have dedicated years of research and invested billions of dollars to develop their expertise.“We know that to go there, it will be better to do this with partners,” Breton said of the 2-nanometer goal. He said the strategy is like “going to the moon.”Intel Corp., the world’s largest chipmaker, has backed the EU’s plans. It’s already expanding 7nm production in Europe and is also considering building a state-of-the-art semiconductor foundry in the region. But the company has struggled to advance its manufacturing in recent years, and its CEO suggested last week the company would likely need hefty financial support from European governments to invest in the bloc’s strategy.An Intel spokesman pointed to companies in Asia that get roughly 40% of the costs of building a new factory subsidized by the state. A new factory costs at least $10 billion and it would need two of them in one location to take advantage of economies of scale, the spokesman said.(Updates with EU announcement from fourth paragraph, STMicro and analyst comments)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.