The proposal fits into the broader long-term objective of digital sovereignty, but will have to stand up to fierce global competition
A key piece of the EC’s digital sovereignty agenda: The European Chips Act has been in the making for some time. President Ursula von der Leyen first announced it in September 2021 in her State of the Union speech, in which digital was framed as the “make-or-break” issue for Europe’s future. In the EC’s Work Programme, the European Chips Act was initially scheduled for Q2 2022. The fact that it has been brought forward to Q1 is testament to the importance the EC is attributing to it. The overarching theme of digital sovereignty (a key element of the EC’s agenda), pairs with the more pressing issue of a global chip shortage. While demand for chips has soared in recent years, Europe’s share across the value chain has shrunk and the continent now depends heavily on the production of chipsets in Asia.
A more investment-friendly framework to achieve an ambitious target: With the European Chips Act, the EC wants to double its global market share of chips manufacturing by 2030, bringing it to 20% compared to 10% in 2020. It aims to mobilise more than €43bn of public investment, which in the long-term it expects to be matched by private funds. This will be achieved using three instruments. The ‘Chips for Europe Initiative’ will pool resources from the Union, Member States and third countries associated with the existing Union programmes, as well as the private sector to amplify the potential of Europe’s research capabilities, which the EC already considers a strength. In parallel, the EC will look to create a more investor-friendly framework to ensure security of supply. A ‘Chips Fund’ will facilitate access to finance for startups. Finally, a coordination mechanism between member states will monitor the supply and demand of semiconductors, in order to anticipate shortages. Alongside the proposed Regulation, the EC has issued a Recommendation to that effect, so that member states can start coordinating immediately.
Europe faces fierce global competition: The issue of chip shortages is a global one, and the EU is not alone in tackling it. Countries such as the US, Japan, South Korea, and China have all adopted policies to address the problem. For example, South Korea aims to secure a leading position in chip manufacturing by 2030, and China looks to achieve chip self-sufficiency by 2025. In the US, the CHIPS for America Act foresees $52bn of investment to strengthen research and manufacturing. Competition for resources and talent is therefore likely to continue, and the EU will need to move quickly to strengthen its position.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729
