EU Approves €8 Billion in State Subsidies for Tech Research

Image credit: European Commission

European Commission approves 8.1 billion euros ($8.7 billion) of state aid for microelectronics and communication tech projects

The European Commission has approved billions of euros of state-aid to encourage the technology and chip sector within the bloc.

Specifically, the Commission “approved, under EU State aid rules, an Important Project of Common European Interest (‘IPCEI’) to support research, innovation and the first industrial deployment of microelectronics and communication technologies across the value chain.”

The European Union is seeking to do everything in its power to encourage the tech sector within its borders. Last November EU countries agreed to a 43-billion-euro plan (European Chips Act) to fund the production of chips in the economic bloc.

Image credit: European Commission
Image credit: European Commission

State aid

In April the Commission and European Parliament had agreed the terms of the European Chips Act.

That move is part of the EU plan to lessen its dependence on chips made in Asia and the United States, and comes after the implications of chip shortages was driven home to many governments during the Covid-19 pandemic.

One of the core tenants of the ‘European Chips Act’ is to bolster Europe’s self sufficiency in the semiconductor sector, by easing state aid rules, improving tools to anticipate shortages and crisis, and strengthen research capacity in the bloc.

And now Europe is once again seeking to provide state-aid with the announcement that the Commission approved 8.1 billion euros ($8.7 billion) of public funding for microelectronics and communication technology projects.

That public funding is expected to unlock additional €13.7 billion in private investments, the Commission claimed.

IPCEI projects

The EU executive said on Thursday that 14 member countries could provide the aid to 68 projects involving companies including Airbus, ASML and Ericsson.

The projects have been collectively designated an Important Project of Common European Interest (IPCEI), qualifying them for easier EU state aid rules.

The projects involve a total of 56 companies, and span various technology areas including research and development into materials and tools, as well as chip design and manufacturing processes. They target communications (5G and 6G), autonomous driving, artificial intelligence (AI) and quantum computing.

The Commission said that the “first novel products may be introduced to the market as early as 2025 and the completion of the overall project is planned for 2032.”

It said that around 8.700 direct jobs are expected to be created, and many more indirect ones.

Need to be pioneers

“Today, the Commission has approved a cutting-edge microelectronics and communication technologies project.” said Commission VP Margrethe Vestager in a news conference. “It is an Important Project of Common European Interest approved under EU State aid rules. We call them IPCEIs.”

EU competition commissioner Margrethe Vestager.  European Commission
Margrethe Vestager.  Image credit: European Commission

“Microchips are the backbone of innovation and of Europe’s industrial competitiveness in a digital world,” Vestager said. “And this is why we must increase the Europe’s own chips research, development and production capabilities. We need to be pioneers and develop truly innovative solutions and their first industrial deployment in Europe.”

“State aid has a key role to play, in particular the Important Projects of Common European Interest,” Vestager said.

She said that 14 member states “Austria, Czechia, Finland, France, Germany, Greece, Ireland, Italy, Malta, the Netherlands, Poland, Romania, Slovakia and Spain), will provide up to 8.1 billion euros in public funding. This is expected to unlock another13.7 billion euros of private investments, Vestager claimed.

This will bring the total investments in the project to over 21 billion euros she said.