Supply chain boost as EU finalises €43bn European Chips Act

The European Union (EU) has finalised a €43bn bid to increase domestic semiconductor production, in the wake of prolonged and ongoing disruption to chip supplies.

The EU executive, the European Commission (EC), has reached a provisional agreement on the terms of the European Chips Act, which seeks to double the EU's market share in semiconductor development, manufacturing, and material supply chains from 10 to 20% by the end of the decade.

Millions of products from cars to washing machines and mobiles rely on microchips, also called semiconductors.

"Europe is too dependent on chips produced abroad, which became more evident during the COVID crisis," the EC's statement read.

The European Chips Act will bolster Europe's competitiveness and resilience, says the EC, by ensuring it has “the necessary tools, skills and technological capabilities to secure supply of semiconductors and to reduce dependencies”.

The Act’s main components are:

• Chips for Europe Initiative This will pool resources from member states and third-party countries associated with the existing Union programmes, as well as the private sector. A total of €11bn will be made available to strengthen research, development and innovation.
• Framework to ensure security of supply  A Chips Fund will facilitate access to finance for start-ups to help them mature their innovations and attract investors.
• Monitoring  Coordination between member states and the EC will underpin monitoring of the supply of semiconductors, estimating demand and anticipating shortages. 

EU Chip Act 'will turn dependency into leadership'

Swedish Minister for Energy, Business, and industry, Ebba Busch, said of the EU announcement: "The new rules represent a real revolution for Europe in the key sector of semiconductors. It will transform our dependency into market leadership, our vulnerability into sovereignty and our expenditure into investment.”

In related news, a leading UK microprocessor manufacturer has warned that without significant Government investment in the chip sector UK firms will go abroad. 

Following Brexit, the UK left the EU, and sits outside of its jurisdiction.

Scott White, of Pragmatic Semiconductor, told the BBC that tens of millions of pounds from the UK Government "isn't enough to move the needle" for the semiconductor sector.

He added: “"It has to be more than £1bn to make a substantive difference. It is not about unfair subsidies but having a level playing field with other countries around the world."

His comments came as a joint report on UK semiconductor challenges from the Institute of Physics and the Royal Academy of Engineering said the UK government "must act now to secure the future of the vital UK semiconductor industry". 

The UK government says it will "soon" publish its strategy to improve access to chip skills, facilities and tools.