Europe preps its CHIPS Act

Europe preps its CHIPS Act

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European CHIPS Act being prepared for early February to boost the semiconductor industry but may be too late
By Nick Flaherty

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The European Commission is finalising its CHIPS Act for support of the semiconductor industry in the region, with the launch planned in early February.

Speaking to the World Economic Forum in Davos, commission president Ursula von der Leyen highlighted five areas that the Act will cover to quadruple chip production in region by 2030, from  changing state aid rules to support fabs to taking equity stakes in startups, as has been demonstrated by the EIC programme.

“There is no digital without chips. And the European need for chips will double in the next decade. This is why we need to radically raise Europe’s game on the development, production and use of this key technology,” she said.

However this may be more of a challenge with a recession in the semiconductor market likely to hit at the end of 2022 or early 2023, which will limit the ability of chip companies to invest.

“Europe is strong in some specific areas, such as the design of components for power electronics, or chips for the automotive and manufacturing industries. Europe is the world’s centre for semiconductor research. And Europe is also very well positioned in terms of the materials and equipment that are needed to run large chip manufacturing plants,” she said. 

“But Europe’s global semiconductors market share is only 10 percent and today most of our supplies come from a handful of producers outside Europe. This is a dependency and uncertainty we simply cannot afford. By 2030, 20 percent of the world’s microchips production should be in Europe. Keep in mind that the world’s production itself will double. This means quadrupling today’s European production.”

“We have no time to lose, [so] we will propose our European Chips Act in early February. It will help us to make progress across five areas.

“First, we will strengthen our world-class research and innovation capacity in Europe. Secondly, we will focus on ensuring European leadership in design and manufacturing. Thirdly, we will further adapt our state aid rules under a set of strict conditions. This will allow public support for European ‘first of a kind’ production facilities that benefit all of Europe.

“Fourthly, we will improve our toolbox to anticipate and respond to shortages and crises in this sector to shore up our security of supply. And fifth, we will support smaller, innovative companies, in accessing advanced skills, industrial partners and equity finance.

Von der Leyen is keen to point out that this is not about protectionism. “Europe will always work to keep global markets open and connected. It is in the world’s interest, and in our own. But we do need to tackle the bottlenecks that slow down our own growth,” she said.

“This will help us become a strong player, not just in some niches, but throughout the whole value chain. To conclude, we will promote diversification among like-minded partners. We will create more balanced interdependencies. And we will build supply chains we can trust by avoiding single points of failure.”

As ever the details are key, particularly for percentage of state aid that will be allowed for projects costing over $10bn and the timelines. THose will be more apparent in a couple of weeks.

ec.europa.eu

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