European Chips Act amended, softened, approved

Technology News | November 25, 2022

By Peter Clarke

Envoys from the member states of the European Union have agreed to an amended version of the €45 billion European Chips Act on Wednesday, according to Reuters.

The European Chips Act is the European Union’s attempt to stimulate investment in domestic development and manufacturing of ICs and the approval by member states brings the bloc a step closer to passing the act that has been a year on the drawing board.

The plan has the declared aim of using national governments’ funds to double Europe’s share of global chip manufacturing to 20 percent by 2030. This aim is somewhat undermined by the fact that Europe has fallen way below 10 percent market share and the spending that may be unlocked by the plan is likely to be below that being spent in other regions.

Among the changes sought by European envoys have been to allow state subsidies to a broader range of chips rather than just chips made at the leading-edge of technology, Reuters said.

This move makes some sense. The European Commission has been focused on a strategic interest in developing the ability to make leading-edge chips at around the 2nm node as the means of remaining a player in deep technology. However, European equipment makers do not provide much demand for such technology (see European 2nm chip fab a “futile endeavour,” says think tank).

Broader target for subsidies

A broader base of technology dilutes spending but could help support automobile and industrial equipment makers that are present in Europe. Thes move could cover power semiconductors – crucial to automotive and industrial applications – as well as such fields as high-performance computing and artificial intelligence, widely seen as of strategic interest.

The state representatives have also reduced the powers of monitor and control that the European Commission had given itself in an earlier draft (see Monitor, response parts of European Chips Act misguided, says think tank). The national governments have approved an amendment that says requests to companies for information during a crisis must be proportionate and related to security, Reuters reported.

The amended draft has received unanimous backing and will now be voted on by European Union ministers on December 1. It will still need to be debated on and a vote held in the European Parliament in 2023 before passing into law.

However, there are still issues to be decided over funding with money due to be drawn from research funds and post-pandemic rebuilding funds. One criticism is that spending will almost inevitably be focused in countries that already have wafer fabs and can attract inward investors and therefore favours major economies – Germany, France, Italy and so on – at the expense of other smaller countries.