We need at least $1 billion: Ukraine plans to start its own chip production

The Cabinet of Ministers approves the Strategy for Digital Development of Innovative Activities until 2030, which envisages the establishment of chip production in Ukraine.

The Ministry of Digital Transformation believes that at least $1 billion is needed to establish chip production in Ukraine. This was reported by UNN with reference to the Cabinet of Ministers’ Decree No. 1351-r and Forbes .

Details

On December 31, the Cabinet of Ministers approved the Strategy for the Digital Development of Ukraine’s Innovation Activities until 2030, as well as an action plan for implementing the strategy in 2025-2027. In particular, one of the strategy’s areas of focus is the creation of chip production. As stated in the strategy, semiconductor technologies are developing very rapidly, and today they have become the basis for many modern innovations, such as artificial intelligence, high-powered computers (data centers), mobile phones and gadgets, the Internet of Things, etc.

The European Union adopted an act that provides for an investment of 43 billion euros in microchip production in Europe, and the EU’s ambitious goal is to “take a 20% share of the global semiconductor market by 2030,” which “creates great prospects for the development of the industry in Ukraine and the integration of Ukrainian producers into supply chains.

Despite the presence of a large number of specialists employed by global companies developing software and chip design, there is not a single specialized manufacturing enterprise. The semiconductor industry in Ukraine is now virtually non-existent. In the past, research and production enterprises in Ukraine developed up to 40 percent of the microelectronics in the USSR until the early 1990s. After the collapse of the Soviet system, Ukraine lost its market position, and many specialists emigrated or retrained in other areas

It is pointed out that the main obstacles to the development of the semiconductor technology industry are the insufficient level of research and development, the outflow of specialists, insufficient infrastructure for the development of high technologies, the obsolescence of the element base, the presence of high competition in the global market and the complexity of integration into global supply chains, and the insufficient size of the domestic market.

Ukraine’s advantage for entering this sector is its human capital and experience in microelectronics development. Despite the significant loss of scientific and production potential, the history of the industry, the availability of scientific and educational base, and the preservation of the specialty “Microelectronics” (now “Micro- and nanosystems technology”) indicate that there is a foundation for the revival of the semiconductor technology industry

The document states that this direction of the strategy has been achieved:

• submission of a draft law on the development of the semiconductor technology industry, which will create a favorable environment for development and investment in the microelectronics sector, in particular by creating incentives for research and development;
• creating an innovation cluster that will bring together research institutes, higher education institutions, startups and private companies in the semiconductor sector;
• Ensuring synergy with other innovation clusters, integration of Ukrainian microelectronics into the development of other innovation clusters, including defense technologies;
• signing memorandums with the EU and microelectronics companies on joint projects, investment programs, and involvement in the implementation of the plan under the European Chip Act;
• promoting investment in the creation of production facilities in the microelectronics sector.

The operational plan for the strategy states that by the 3rd quarter of 2025, it is planned to sign memorandums with the EU and microelectronics companies on joint projects, investment programs, and involvement in the implementation of the European Chip Act, which “will establish new partnerships, create opportunities for Ukrainian producers, and integrate into pan-European efforts to increase semiconductor production.

According to Forbes, the largest players in the chip manufacturing market are Taiwan’s TSMC and South Korea’s Samsung. To reduce dependence, China, the US, and Europe spare no expense in supporting their own companies.

Oleksandr Hrudanov, a member of the working group at the Ministry of Digital Transformation, told the publication that the Ministry of Digital Transformation wants to launch the production of chips with a size of 180, 130, and 110 nanometers. These are not the most advanced developments (American Intel and TSMC are working on 1.8 nm and 4 nm technologies, respectively).

Such chips can meet the needs of the defense, agricultural, and automotive sectors. The authors of the document consider the American company Silvaco Group as a partner for developing software for the chips. Who will produce them and how? There are two options.

The Ministry of Digital Transformation can engage a licensee company that will be responsible for overseeing the construction of the plant, setting up the equipment, and launching the pilot line. In this scenario, the state could own a controlling stake in the factory, ensuring priority for its own military-industrial complex needs and advanced research projects. This stage also involves training Ukrainian specialists abroad.

It can last for six months or a year, and Ukraine will pay the partner a license fee and receive technical support

He noted that Ukraine could make its own add-on to the existing technology and produce more specialized chips, such as those that are more resistant to EW or better function in space. Another option for developing chips in Ukraine is to attract a partner through a public tender. Grudanov noted that the benchmark figure for building a fab using the licensing model is up to $1 billion.

We considered several options, but in all of them we managed to keep within this amount

In this case, technology licensing is paid separately.

If a strategic partner is invited, the latter determines the budget. However, as long as Ukraine has not adopted the equivalent of the European law on chips, Chips Act UA, and there are no agreed subsidies and benefits for partners, it is not known which of the two options will be a priority, Grudanov says.

For signing an agreement with potential partners, it is important to stabilize the hostilities and get security guarantees from the partners. From the moment the contract is signed with a partner, it will take two years to build and prepare the factory for operation. By the end of the third year, the full production capacity will be reached

Recall

Ukraine has approved the WINWIN Digital Development Strategy until 2030, aimed at creating a global technology hub. The document identifies 14 key areas, including DefenseTech, MedTech, and space technologies, with a focus on specialized centers for innovation.