In a few days, the EU Commission Vice President for Prosperity and Industrial Strategy wants to present a new mechanism to protect companies from low-cost competition.
By Till Hoppe
The Chips Act is intended to strengthen European competitiveness and resilience in semiconductor technologies and applications. With the Act, the EU wants to simplify approval procedures for the construction of chip factories and facilitate state aid. The regulation has been in force since Sept. 21, 2023. All news about the EU Chips Act from Table.Briefings. What is the EU Chips Act? With the EU Chips Act, the European Union is securing its supply of high-performance semiconductors. The semiconductor value chain within the EU is to be stabilized – even in times of crisis such as the Covid pandemic or political upheaval. At the same time, the EU is strengthening its technological leadership and competitiveness in the digital sector with the Chips Act. What does the EU Chips Act entail? So far, Europe's share of the global semiconductor market is only 10% – despite state-of-the-art technology and research. The EU is therefore dependent on suppliers from all over the world. As these supply chains are susceptible to disruption, the EU Chips Act is primarily aimed at strengthening the internal market. The EU's ambitious goal is to double its share of the semiconductor market by 2030. The EU Commission is investing EUR 48 billion to achieve this. The EU Innovation Council is already investing in various programs to develop modern and efficient semiconductor systems. Furthermore, an industrial alliance for processors and semiconductors has been in place since 2021. The Chips Act is also intended to strengthen cooperation between industry, research and member states. The EU also promotes investment in production facilities as part of the Chips Act. Who does the EU Chips Act apply to? The Chip Act is intended for all players in chip development, production and the chip industry. The EU Chips Act is therefore aimed at private investors, companies, production facilities and the scientific community. Scientific sectors can be supported with state aid if incentives are only designed to promote innovation and are proportionate and do not distort competition. The EU Chips Act was modeled on the US model: The Chips Act in the US was passed in July 2022. It provides a tax credit of 25% for US facilities that produce semiconductors or chip manufacturing equipment and USD 52 billion for new semiconductor programs. What problems will the EU Chips Act solve? Smartphones, cars and cameras: virtually all digital products and technologies rely on semiconductor chips. Chips are also essential for critical applications in the medical and energy sectors. However, the supply chains were disrupted during the Covid pandemic. There was a worldwide chip shortage. This had a major impact on the automotive industry, for example – a weakness of digital Europe that the EU Chips Act is intended to resolve. The Chip Act has both a short and long-term effect: in the short term, the Act is intended to end the semiconductor crisis, and in the medium and long term, to guarantee security of supply. Europe should become the market leader in the field of semiconductor technology in the future. This will also reduce the dangerous dependence on existing suppliers such as Taiwan or China. The current market leader is the Taiwanese semiconductor manufacturer TSMC. What is the Chips for Europe initiative? The financing of the EU Chips Act is mainly secured by the "Chips for Europe" initiative. The initiative pools EU investments totaling EUR 11 billion and at the same time acquires private investors. Chips for Europe generally strengthens investment in innovative chip technology and secures the supply of semiconductor technology. The initiative also takes measures to recruit suitable electrical specialists. "Chips for Europe" supports study courses, retraining programs and other opportunities to acquire skills. In this way, the Chips Act also combats the shortage of skilled workers in the electronics industry. What are "Digital Europe" and "Horizon Europe"? The "Chips for Europe" initiative is part of the "Digital Europe" and "Horizon Europe" digital programs. "Digital Europe" is primarily aimed at building digital capacities. In addition to chip technology, this also includes quantum computers, artificial intelligence (AI) and cyber security. The "Horizon Europe" program, on the other hand, promotes scientific research and technological innovation. What criticism is leveled at the EU Chips Act? There is criticism that the industrial policy offensive restricts free competition through its subsidies. Critics also doubt the competence of the EU authorities to recognize the market potential of the players. Industry, on the other hand, welcomes the EU Chips Act as an important step towards a competitive digital Europe. This is the only way the EU can keep up with current innovation. Whether the EU's multi-billion euro investments will offer a way out of the semiconductor crisis remains uncertain. Likewise, whether the Chips Act will receive the final approval of the EU Parliament and member states. The Table.Briefings.editorial team provides summaries and analyses of the impact of the Chips Act on semiconductor research and production.
