The European Commission unveiled a comprehensive package of measures to guarantee the Union's supply security, resilience, and technical leadership in semiconductor technology and applications. The European Chip Act will boost Europe's competitiveness and resilience while also assisting in the digital and green transformations.
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| [EU Chip Act 2022] |
Recent global semiconductor shortages have caused plant closures in a variety of industries, ranging from automobile production to medical devices. For example, in some Member States, car output will fall by one-third in 2021. This underlined the semiconductor value chain's excessive global reliance on a relatively small number of actors acting in a complicated geopolitical setting. It also demonstrates the significance of semiconductors to European industry and society as a whole.
The European Chip Act will capitalize on Europe's assets – leading research and technology organizations and networks, as well as numerous pioneering hardware manufacturers – while addressing the remaining inadequacies. It will create a thriving semiconductor sector - from research to manufacturing and a resilient supply chain. Together with Member States and international partners, the act will mobilize more than EUR 43 billion in public and private investment and identify strategies to avoid, forecast, prepare for, and respond to future supply chain disruptions. It will allow the EU to meet its ambitious goal of doubling its current market share to 20% by 2030.
The European Chip Act will ensure that the EU has the tools, skills, and technological capabilities to become a leader in this field, not only in research and technology, but also in the design, production, and packaging of advanced integrated circuits, securing semiconductor supplies and reducing the union's reliance. The following are the key components of the EU CHIP ACT:
Through an improved Chip Joint Undertaking resulting from the strategic reorientation of the current Key Digital Technology Joint Undertaking, the Chips for Europe initiative will bring together the resources of the Union, Member States, and third countries associated with existing Union programs, as well as the private sector. EUR 11 billion will be made available to fund current R&D&I, the implementation of advanced semiconductor tools, pilot lines for prototyping, testing, and experimenting with new devices for innovative real-world applications, staff training, and learning more about the semiconductor ecosystem and chain values.
A new framework for ensuring supply security by attracting investment and boosting manufacturing capacity, both of which are required for innovation to flourish in high-end nodes and unique, energy-efficient chips. Furthermore, the Chip Fund will improve entrepreneurs' access to cash, allowing them to fine-tune their idea and attract investors. It will also feature a specialized semiconductor equity investment fund under InvestEU to help scale-ups and SMEs expand into new markets.
Mechanism for Member States and the Commission to coordinate in order to monitor semiconductor supply, forecast demand, and foresee shortages. It will monitor the semiconductor value chain by obtaining vital information from businesses in order to identify major flaws and bottlenecks. It will enable for the formation of a shared crisis assessment and the coordination of measures to be picked from the new Emergency Toolkit. It will also guarantee a rapid and decisive combined reaction by fully using national and EU tools.
Along with the proposal, the Commission issues a Recommendation to Member States. It is a tool with immediate impact for activating the coordination mechanism between Member States and the Commission. It will now be possible to discuss and make decisions on timely and proportional crisis response actions.
Members of the College of Commissioners make the following comments:
According to Commission President Ursula von der Leyen, the European Chip Act will be a game changer in the European Union's worldwide competitiveness. In the medium term, we will strengthen our resilience to future crises, allowing us to predict and avert supply chain interruptions. In the medium run, this will contribute to Europe's position as an industrial leader in this key area. The European Chip Act is a long-term investment and strategy plan. The key to success, however, are European inventors, world-class academics, and those who have assured our continent's progress for decades.
Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age, added: "Chips are vital for the ecological and digital transition, as well as for European industry's competitiveness." We should not rely on a single country or corporation to assure supply security. We must collaborate more in terms of research, innovation, design, and manufacturing facilities to strengthen Europe's position as a vital participant in the global value chain. It will be beneficial to our overseas partners as well. We will collaborate with them to avoid future supply issues.
According to Thierry Breton, Internal Market Commissioner, "without chips, there is no digital revolution, no green transformation, and no technical leadership." Securing the supply of the most modern integrated circuits has emerged as a critical economic and geopolitical imperative. Our ambitions are lofty: to increase our worldwide market share to 20% by 2030, and to manufacture the most innovative and energy-efficient semiconductors in Europe. We will improve our research excellence and make the transfer from the laboratory to the manufacturing line easier thanks to the European Chip Act. We mobilize substantial public funds, which are already attracting substantial private investment. We also make every effort to protect the whole supply chain in order to avoid future economic shocks like the current chip shortage. We will help European industry to stay competitive, generate high-quality employment, and fulfill expanding global demand by investing in future lead markets and restoring the balance of global supply chains.
The 'Chips for Europe' initiative is closely linked to the Horizon Europe program and will build on continuous research and innovation to develop the next generation of smaller and more energy-efficient integrated circuits, according to Marija Gabriel, Commissioner for Innovation, Research, Culture, Education, and Youth. The future project will present a fantastic chance for our scientists, inventors, and start-ups to spearhead a new wave of innovation that generates sophisticated hardware-based technological solutions. Chip design and production in Europe will benefit our economic players in critical value chains and assist us in meeting our ambitious targets in building, transportation, energy, and digital technology.
Further Action
Member States are encouraged to immediately begin the recommended coordination activities in order to identify the current state of the EU-wide semiconductor value chain, anticipate potential distortions, and implement corrective measures to alleviate current shortages pending the regulation's adoption. Under the standard legislative procedure, the European Parliament and the Member States will have to debate the Commission's proposals for a European chip act. The regulation, if passed, will be immediately applicable throughout the EU.
Context
Chips are strategic assets for key industrial value chains. As the digital transformation progresses, new markets are emerging for the chip sector, such as: highly automated cars, cloud computing, internet of things, connectivity (5G / 6G), space / defense, computing and supercomputers. Semiconductors are also at the center of strong geopolitical interests that determine the ability of states to act (militarily, economically, industrially) and drive digital and ecological transformation.
Commission President Ursula von der Leyen outlined a vision for a European chip strategy in her 2021 State of the Union address, aiming to create a modern European ecosystem of integrated circuits, encompassing manufacturing and combining EU capabilities in world-class research, design, and development. as well as testing The Chair also paid a visit to ASML, a major European participant in the Eindhoven-based semiconductor value chain.
The European Commission formed the Industrial Alliance for Processors and Semiconductor Technologies in July 2021 to identify gaps in the manufacture of integrated circuits and innovative technologies that businesses and organizations of all sizes require to flourish. In collaboration with other stakeholders, the Alliance will facilitate coordination between present and future EU projects, as well as play a vital advising role and create a Strategic Action Plan for the Chips for Europe initiative.
So far, 22 Member States have pledged to working together to develop the European electronics and embedded systems value chain and expand advanced manufacturing capacity in a joint declaration signed in December 2020.
The additional funding will contribute to Europe's digital decade targets for 2030, such as achieving a 20 percent global IC market share by 2030.
Along with the chip act, the Commission also released a focused stakeholder survey today in order to obtain specific information on present and future demand for chips and semiconductor wafers. The findings of this study will aid in understanding how the chip scarcity impacts European business.