Hungary— Dentons Europe Consulting is proud to have been a lead contributor in a months-long examination of the framework for the Hungarian national semiconductor and chip strategy. Partnering with the Ministry of National Economy and Neumann Nonprofit Ltd., Dentons Europe Consulting has completed an in-depth market study and analysis of Hungary’s strengths and areas for further improvement. The work will be used by the Ministry of National Economy and Neumann Nonprofit Ltd. as a key instrument in moving Hungary further forward in the fields of semiconductors and chips.

We believe that the development of the Hungarian semiconductor and chip strategy will be a core element of the country’s industrial policy for years to come and are honoured to have been a lead sponsor and participant in the study. The strategy will be a core element of national policy for several reasons:

First, there is a global race in the sector to nearshore know-how and capital that might otherwise stay in Asia. In 2022 the US adopted the Inflation Reduction Act and the Chips Act, both of which are clearly targeted at pouring public money into research and investments on American soil. European counter-regulatory measures, the EU Chips Act and the establishment of a managing agency, the EU Chips Joint Undertaking – formerly known as the agency for key technologies – aim to boost investment and production the sector. Asian states, in particular China, have been supporting their industries for an even longer period.   Second, our market research revealed that the global chips and semis market is only likely to grow and will do so at speed. Third, other European countries are working on their respective sectoral policies and synergies can be identified.

In Europe, except perhaps for a few targeted national strategies in France and Italy, sector-related policies have systematically eroded the chips and semis industry for the past 40 years, leading to the outsourcing of production and assembly mainly to Asia. Hungary is no exception in this regard. Nevertheless, specific testing and design related know-how (ASIC, for example) is present at competence-centre level and at some universities. Future engineers can be thought, and the knowledge could be passed on. Legacy-chips for crucial industrial solutions are being made and assembled also in Hungary, and production could be scaled up. The electric vehicle market is growing globally, car manufacturers are already building new sites in Hungary (BYD, BMW) and smart industrial solutions are increasingly needed. Using existing industrial solutions and advanced basic and applied research capacities – substrates, laser-technology, equipment manufacturing, thermal testing – as the basis for expansion is an obvious call.

With a thought-through sectoral strategy Hungary can become a more important player in the global value chain of semiconductors, corresponding to its geographical and economic possibilities. Such a strategy requires further work and coordination with regional initiatives and other EU member states. We at Dentons are now focusing on the next stage of the planning process, taking into careful consideration all stakeholders.  We are proud to be a key player in the reconstruction of the Hungarian semiconductor and chip ecosystem.

For further information, please contact Pál Belényesi or Benedek Lőrincz.

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