The European Chips Act will bolster Europe’s competitiveness and resilience in semiconductor technologies and applications, and help achieve both the digital and green transition. It will do this by strengthening Europe’s technological leadership in the field. Following the approval by the Parliament and the Council, the regulation entered into force on 21 September 2023.
The need for EU action
Chips are strategic assets for key industrial value chains. With the digital transformation, new markets for the chip industry are emerging such as highly automated cars, cloud, Internet of Things, connectivity, space, defence and supercomputers.
Recent global semiconductor shortages forced factory closures in a range of sectors, from cars to healthcare devices. This made more evident the extreme global dependency of the semiconductor value chain on a very limited number of actors in a complex geopolitical context.
The findings of the Chips Survey, launched by the European Commission, highlighted that industry expects demand for chips to double by 2030. This reflects the growing importance of semiconductors for European industry and society. There will be challenges in meeting this increasing demand, especially in light of the current semiconductor supply crisis.
In her 2021 State of the Union speech, Commission President Ursula von der Leyen set the vision for Europe’s chip strategy, to jointly create a state-of-the-art European chip ecosystem. This will include production, as well as connecting the EU’s world-class research, design and testing capacities. And already in her 2022 State of the Union speech, President von der Leyen highlighted that the first chips gigafactory in Europe will break ground in the coming months.
Strengthening Europe’s technological leadership
With the European Chips Act, the EU will address semiconductor shortages and strengthen Europe’s technological leadership. It will mobilise more than € 43 billion of public and private investments and set measures to prepare, anticipate and swiftly respond to any future supply chain disruptions, together with Member States and our international partners.
This will be achieved based on three pillars of action:
- The "Chips for Europe Initiative" will support large-scale technological capacity building and innovation
- A framework to incetivise public and private investments in manufacturing facilities will ensure the security of supply and resilience of the Union's semiconductor sector
- A coordination mechanism through the European Semiconductor Board will be the key platform for coordination between the Commission, Member States and stakeholders
The aim is to:
Strengthen Europe’s research and technology leadership towards smaller and faster chips
Put in place a framework to increase production capacity to 20% of the global market by 2030
Build and reinforce capacity to innovate in the design, manufacturing and packaging of advanced chips
Develop an in-depth understanding of the global semiconductor supply chains
Address the skills shortage, attract new talent and support the emergence of a skilled workforce
Investments to support the Chips Act
The Chips Act itself should result in additional public and private investments of more than €15 billion.
These investments will complement:
- existing programmes and actions in research and innovation in semiconductors such as Horizon Europe and the Digital Europe programme
- announced support by Member States
In total, more than €43 billion of policy-driven investment will support the Chips Act until 2030, which will be broadly matched by long-term private investment.
The Chips Act proposes:
- Investments in next-generation technologies
- Providing access across Europe to design tools and pilot lines for the prototyping, testing and experimentation of cutting-edge chips
- Certification procedures for energy-efficient and trusted chips to guarantee quality and security for critical applications
- A more investor-friendly framework for establishing manufacturing facilities in Europe
- Support for innovative start-ups, scale-ups and SMEs in accessing equity finance
- Fostering skills, talent and innovation in microelectronics
- Tools for anticipating and responding to semiconductors shortages and crises to ensure security of supply
- Building semiconductor international partnerships with like-minded countries