Citizens often turn to the European Parliament to ask what the European Union (EU) is doing to ensure a supply of microchips and semiconductors.
Computer chips are ubiquitous. We use them in an impressive range of products, from computers to medical devices, 5G and artificial intelligence systems, and security and defence devices. The production of these chips is dependent on a large global supply chain in which countries all over the world participate. Disruptions in one part of the supply chain can lead to major problems. In 2020, a storm in Texas and fires in Taiwan and Japan, combined with the coronavirus pandemic, led to a global shortage in chips.
We import nearly all the chips used in the EU, mostly from Taiwan. This means that the EU is dependent on foreign production, making it vulnerable to supply chain disruptions and trade disputes. To prevent shortages in the future, the European Union is planning to increase the production of chips in EU countries.
Boosting the production of microchips in the EU
In February 2022, the European Commission proposed a European chips act. The aim is to double the EU’s current market share of chips to 20 % by 2030. To achieve this target, the EU would increase its funding of the chips industry to almost €5 billion. The EU also aims to encourage a large amount of private investment.
The European Union would boost chips production in several ways. The proposed European chips act would establish a mechanism promoting research into the development of chips, in part by making it easier for researchers to test new prototypes. The proposed legislation also aims to help companies train staff to work on chips. Additionally, the EU would set up a chips fund, which would finance start-ups and help them attract investment. The European chips act would also fund factories that produce chips.
Lastly, the Commission proposes to improve coordination between EU countries in monitoring potential shortages, and evaluating future supply and demand.
You can find more information about progress on the proposal on the legislative train schedule website. The Parliament and government ministers from the EU countries are now considering the proposal.
Position of the European Parliament
The European Parliament has not yet adopted a formal position on the proposal for a European chips act. However, in a June 2021 resolution, Parliament already called on the Commission and EU countries to invest in the production of chips and similar technologies.
Further information
- European Chips Act – Questions and Answers, European Commission, 2022
- Digital sovereignty: Commission proposes Chips Act to confront semiconductor shortages and strengthen Europe’s technological leadership, European Commission 2022
- Ten issues to watch in 2022, European Parliamentary Research Service, In-Depth Analysis, 2022
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