European Commission: less dependence in semiconductors – European chip law proposed

The European Commission aims to strengthen the EU’s resilience and technological sovereignty in semiconductor technologies and applications. To this end, it presented the European Chip Bill today (Tuesday). Together with member states and international partners, it aims to mobilize more than 43 billion euros in public and private investment. The goal is to double the EU’s current market share to 20 percent by 2030.

"The European Chip Bill will transform the global competitiveness of the European single market. In the short term, it will increase our resilience to future crises by allowing us to anticipate and avoid supply chain disruptions. In the medium term, it will help Europe become a leader in this strategically important industry," said EU Commission President Ursula von der Leyen in Brussels.

Thanks to the European Chip Bill, the EU will have the necessary tools, competencies and technological capabilities to become a leader in the design, manufacture and packaging of advanced chips, secure its supply of semiconductors and reduce its dependencies.

The most important of these are:

• The "Chips for Europe" initiative will pool the resources of the Union, Member States and third countries participating in existing Union programs, as well as the private sector, with the help of the enhanced "Joint Undertaking for Chips". To this end, the existing Joint Undertaking for Key Digital Technologies will be strategically reoriented. 11 billion will be allocated to strengthen research, development and innovation, ensure the use of advanced semiconductor tools and the establishment of pilot plants for prototypes as well as the testing and trialling of new semiconductor models for innovative practical applications, train specialists and develop a deeper understanding of the semiconductor ecosystem and value chain.
• A new framework will ensure security of supply by incentivizing investment and improved manufacturing capacity, which are urgently needed to drive innovation in advanced node densities and innovative and energy-efficient chips. In addition, a chip fund will help start-up companies access funding to bring their innovations to market and attract investors. It will include a dedicated equity investment facility for semiconductors under InvestEU to support scale-ups and SMEs and facilitate their market expansion.
• A mechanism for coordination between Member States and the Commission will be used to monitor semiconductor supply, estimate demand and anticipate bottlenecks. The body will monitor the semiconductor value chain and, to this end, collect key information from companies to map key weaknesses and bottlenecks. It will provide a joint crisis assessment and coordinate actions to be taken from a new emergency response toolkit. The body will also ensure a rapid and decisive joint response, making full use of national and European instruments.

The Commission also proposes an accompanying Recommendation to Member States. This is an instrument that will take immediate effect to allow the immediate activation of the coordination mechanism between the Member States and the Commission. Thus, timely and appropriate crisis response measures can be discussed and decided from now on.

Next steps
Member States are encouraged to immediately begin coordination efforts in line with the Recommendation to understand the current state of the semiconductor value chain across the EU, anticipate potential disruptions, and take remedial action to overcome the current shortfall by the time the Regulation is adopted. The European Parliament and Member States will need to discuss the Commission’s proposals for a European chips law through the ordinary legislative procedure. If adopted, the Regulation will be directly applicable throughout the EU.

Background
Chips are strategic assets for key industrial value chains. With the digital transformation, new markets are emerging for the chip industry such as highly automated cars, cloud, Internet of Things, connectivity (5G/6G), space/defense, computing capacity and supercomputers. Semiconductors are also at the center of strong geopolitical interests as they affect countries’ ability to act (militarily, economically, industrially) and digitize.

Statement from industry association Silicon Saxony
"After the announcements, things are now getting concrete. While the semiconductor industry is still waiting for a legally binding commitment on the IPCEI program, the European Commission is now showing the speed that is urgently needed in order not to fall even further behind in the global competition for investments for new production capacity. It is absolutely essential that the framework conditions are created in Europe that have long been in place in other regions of the world. European semiconductor companies are still reluctant to invest outside the EU. 

If there are now no binding decisions by the European nation states, it will be more difficult to explain this hesitancy to investors in a plausible way. For example, the new German government must present a budget by March that matches its stated ambitions. Industry is on the starting blocks, for IPCEI as well as for other investments. It remains the case that speed is the key to success. The Chip Act is a very good basis for maintaining the economic commitment of the chip industry in Europe and in Silicon Saxony and for enabling new investments, such as those promised by Intel or TSMC for Europe. This chance must be seized now", says Dirk Röhrborn, chairman of the board Silicon Saxony e. V..

Links

https://ec.europa.eu/info/index_de   European Chip Law – Questions and AnswersEuropean Chip Law – Factsheet

Image: European Commission