EU joins chips race with €43-billion bid to rival Asia

Bloc aims for 20% of global market by quadrupling efforts

February 08, 2022 10:40 pm | Updated 11:03 pm IST - Brussels

Ursula von der Leyen

Ursula von der Leyen

The EU on Tuesday unveiled a plan to quadruple the supply of semiconductors in Europe by 2030, hoping to limit the bloc’s dependence on Asia for a key component used in electric cars and smartphones.

The production of chips has become a strategic priority in Europe as well as the United States, after the shock of the pandemic choked off supply, bringing factories to a standstill and emptying stores of products.

The manufacturing of semiconductors overwhelmingly takes place in Taiwan, China and South Korea and the European Union wants factories and companies inside the bloc to take on a bigger role.

Chips Act

The highly anticipated EU Chips Act will “mobilise more than €43 billion ($49.1 billion) of public and private investments” and “enable the EU to reach its ambition to double its current market share to 20% in 2030”, the European Commission said.

“We’ve set ourselves the goal to have 20% of the global market share of chips production here in Europe,” European Commission President Ursula von der Leyen said. Getting to that level “means basically quadrupling our efforts” given the huge increase in global demand, she said.

If approved, the EU plans could generate a total of €43 billion via existing EU budget money as well as by loosening existing rules on public subsidy from member states.

Approval of members

The proposal will need the approval of the EU member states and European Parliament, where opinions will vary between the ambitions of industrial heavyweights such as Germany, France and Italy and those of smaller states that are worried about closing off valuable supply chains with Asia.

Some member states, led by the Netherlands and Nordic nations, will also resist any plan to widen the scope for state aid, with the commission planning to make it easier for EU governments to pump money to chip-makers.

“We don’t want to end up in a position with a huge U.S. company getting a bunch of EU money to open a factory in one big member state,” an EU diplomat said.

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