THE EU will invest in Startups to get ahead in chip production

The European Commission has presented a 43 billion euros project for public and private investments in chips (semiconductors) by 2030. Presenting the European Chips Act initiative, Internal Market Commissioner Thierry Breton stressed that the aim is to double the EU’s share of chip production on the world market, which currently stands at only 10%, while at the same time reducing its dependence on Asian countries, mainly Taiwan and Korea. Semiconductor production in Europe must reach 20% of the world market by 2030, in a market that will double anyway, so this means that a four-fold increase in semiconductor production is needed in Europe, the French Commissioner noted.

“Without chips, there is no digital transition, no green transition, no technological leadership.Securing the supply to the most advanced chips has become an economic and geopolitical priority,” said Thierry Breton, noting that the EU is mobilising significant public funding, which is already attracting significant private investment. “We are doing everything we can to secure the entire supply chain and avoid future shocks to our economy, as we see with the current lack of chip supply.By investing in the top markets of the future and balancing global supply chains, we will allow European industry to remain competitive, create quality jobs and meet growing global demand,” he said.

According to the Commission’s communication, recent global semiconductor shortages have forced the closure of factories in a wide range of sectors, from cars to healthcare devices.In the automotive sector, for example, production in some Member States fell by a third in 2021. This has highlighted the extreme global dependence of the semiconductor value chain on a very limited number of actors in a complex geopolitical context. But it has also demonstrated the importance of semiconductors for the whole of European industry and society.

The Commission is proposing 11 billion euros to be made available for this purpose, around half of the EU budget and the other half of the Member States, to strengthen existing research, development and innovation and to ensure the development of advanced semiconductors. The Commission is also proposing to make public investments, amounting to 30 billion euros, to increase semiconductor production in Europe – an amount that is expected to leverage a larger amount of private investment. In order to provide public support for investments in chip production facilities, the Commission will be able to consider authorising State aid, subject to conditions.

In addition, more than 2 billion euros are intended to support Startups through a new EU Chips Fund. The Commission stresses that the Chips for Europe initiative will raise funds from the EU, Member States and third countries linked to existing Union programmes, as well as the private sector, through the enhanced “Joint Chips Undertaking”.

“The European Chip Act will ensure that the EU has the necessary tools, skills and technological capacities to become a leader in this field beyond research and technology in the design, manufacture and packaging of advanced chips, to ensure the supply of semiconductors and reduce its dependencies,” stresses the Commission.

Commission Vice-President for the Digital Age Margret Vestager stressed that chips are essential for the green and digital transition and for the competitiveness of European industry. “We should not rely on a country or a company to ensure security of supply. We need to do more together, in research, innovation, design, production facilities – to ensure that Europe is stronger as a key player in the global value chain. It will also benefit our international partners. We will work with them to avoid future supply problems.”

The Commission’s proposals for a European chip law will first need to be approved by member states and the European Parliament for the regulation to apply directly across the EU.