Written by Kjeld van Wieringen.
The proposed European chips act, presented by the European Commission in February 2022, aims to mobilise €43 billion in ‘policy-driven investment’ for the EU’s semiconductor sector by 2030. The Commission expects long-term private investment to exceed this. The plan serves to enable immediate EU coordination against supply disruptions, strengthen and scale up production and innovation throughout the EU semiconductor value chain, and further enhance the Union’s technological leadership, practical applications and digital sovereignty in this crucial field.
The global semiconductor value chain is characterised by chokepoints and critical dependencies, including on more advanced chips from Taiwan and South Korea, US intellectual property in chip design automation, Japanese wafers and Chinese chip assembly. Europe has strong capacities in research and equipment manufacturing, in addition to some production capacity of (less advanced) chips with larger transistors, often destined for the automotive sector, as well as (chemical) inputs.
The future effectiveness of the EU chips act could benefit from further emphasis on certain key challenges to strengthen and safeguard Europe’s position in the global chip value chain. Internally, reinforcing European chemical input and back-end manufacturing could be advanced by protecting European chemical suppliers against Chinese subsidies and by reshoring back-end facilities to Europe. Bilaterally, attracting and engaging in foreign semiconductor investment could see the use of relevant forums, partnerships and agreements, as well as relevant fast-track permits. Globally, enhancing foreign dependencies on the EU would require further reinforcement of existing European centres of excellence including in innovative research and equipment manufacturing.
The EU chips act, if provided with the right resources, could help to improve the EU’s position in the global semiconductor value chain significantly by 2030. Meanwhile, Intel’s €33 billion investment and Taiwanese interest in European chip manufacturing are also cause for optimism.
Read the complete briefing on ‘Strengthening EU chip capabilities‘ in the Think Tank pages of the European Parliament.
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