EU Plans European Chips Act To Increase Production

The European Commission on Wednesday announced a plan to bolster its self sufficiency in the semiconductor sector.

With the global chip shortage showing no sign of easing any time soon, the EC plan was announced by EU President Ursula von der Leyen in her speech on Wednesday.

The move was not unexpected however. In March this year the European Union under its 2030 Digital Compass plan announced it wanted to produce at least 20 percent of the world’s cutting-edge semiconductors by the end of the decade.

EC Chip Act

However the European Commission firmed up its plans this week when it announced plans on Wednesday for a new chipmaking “ecosystem”, to keep the EU competitive and self-sufficient.

“Digital is the make-or-break issue, said Ursula von der Leyen. “And Member States share that view.”

“That reflects the importance of investing in our European tech sovereignty,” she said. “We have to double down to shape our digital transformation according to our own rules and values.”

“Allow me to focus on semi-conductors, those tiny chips that make everything work: from smartphones and electric scooters to trains or entire smart factories, she added. “There is no digital without chips. And while we speak, whole production lines are already working at reduced speed – despite growing demand – because of a shortage of semi-conductors.”

“But while global demand has exploded, Europe’s share across the entire value chain, from design to manufacturing capacity has shrunk,” she said. “We depend on state-of-the-art chips manufactured in Asia.”

“So this is not just a matter of our competitiveness,” she said. “This is also a matter of tech sovereignty. So let’s put all of our focus on it.”

“We will present a new European Chips Act,” she said. “We need to link together our world-class research, design and testing capacities. We need to coordinate EU and national investment along the value chain.”

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“The aim is to jointly create a state-of-the-art European chip ecosystem, including production,” said von der Leyen. “That ensures our security of supply and will develop new markets for ground-breaking European tech.”

“Yes, this is a daunting task. And I know that some claim it cannot be done,” she said. “But they said the same thing about Galileo 20 years ago.”

“And look what happened,” she said. “We got our act together. Today European satellites provide the navigation system for more than 2 billion smartphones worldwide. We are world leaders. So let’s be bold again, this time with semiconductors.”

It should be noted that the EC is not alone in this.

The United States in 2020 announced its CHIPS for America Act aimed at boosting its ability to compete with Chinese technology.

Possible signs?

And there are possible signs that the EC desire for chip production may be attracting some interest.

Earlier this month Intel CEO Pat Gelsinger said the chip giant could potentially invest as much as 80 billion euros ($95bn or £69bn) to expand chip production in Europe.

However Gelsinger in March made clear he wanted something in return, after he was quoted as saying Intel is looking for 8 billion euros (£7bn) in public subsidies toward its planned semiconductor fabrication plant in Europe.

And Taiwan Semiconductor Manufacturing Co. (TSMC) has previously warned that plans by US, EU and others to bring semiconductor production into their own countries could result in a costly, unworkable system.

In July TSMC dampened down speculation that the world’s largest contract chip maker was considering building its first European semiconductor plant in Germany.