The European Union has allocated €43 billion to strengthen Europe’s microchip industry, the EU announced. The investment is aimed at enhancing Europe’s technological leadership and increasing its competitiveness and sustainability in the semiconductor industry.
The European Chip Law: Doubling the EU Manufacturing Capacity by 2030
The EU has officially approved the European Chip Law after months of negotiations between the European Council and the European Parliament. The law will increase Europe’s chip manufacturing business by allocating funds to facilitate an effective digital and green transition based on high-tech technologies. The plan aims to double EU manufacturing capacity to 20% of the global market by 2030, increasing Europe’s scientific and technical expertise in the field of microcircuit development.
The investment will also enhance manufacturing and packaging innovation capability and deepen understanding of the global semiconductor supply chain. The plan aims to solve the problem of the shortage of qualified personnel by attracting new talent and increasing the strength of qualified labor. This move is expected to make Europe an industrial powerhouse in the markets of the future.
Chips: A Strategic Asset for Major Value-Added Industrial Chains
Chips are already a strategic asset for major value-added industrial chains, and digital transformation has opened up new markets for the microprocessor industry, such as highly automated cars, cloud technology, IoT, communications, space, defense, and supercomputers. The recent global shortage of semiconductors has also highlighted the extreme dependence on a very small number of participants in a complex geopolitical context.
This scarcity has been caused by a combination of factors, including the COVID-19 pandemic, trade tensions between the US and China, and extreme weather conditions. As a result, companies have been struggling to meet the increasing demand for chips, and this has had ripple effects across multiple industries.
The automobile industry, for instance, has been hit hard by the shortage of chips. Many car manufacturers have had to cut back on production, leading to long waiting times for customers. The shortage has also affected the production of smartphones, laptops, and gaming consoles, among other electronic devices.
To address this issue, major chip manufacturers are expanding their production capacity, while new players are entering the market.
Europe’s Semiconductor Ecosystem: Resilience and Reduced External Dependency
As the global shortage of semiconductors continues to create economic turbulence, Europe is under pressure to act fast to protect its semiconductor industry. In August, the United States approved the Chips and Science Act, which includes around $52 billion to promote the production of microchips and tens of billions more for scientific research and development.
Japan and South Korea have also vowed to spend billions on developing their countries’ semiconductor production, while Washington has urged its allies, including Japan and the Netherlands, to curb exports of semiconductor technology to China.
In response to these developments, the European Union (EU) is racing to protect its competitive edge in the face of threats from China and the US, which have invested heavily in green technology.
French-Italian chipmaker STMicroelectronics, US-based GlobalFoundries, and US tech giant Intel have announced plans to pour billions into new production sites in France and Germany, with the hope of seeking state subsidies for their projects.
The EU’s executive arm has also published two proposals to push Europe to produce more clean technology, including critical raw materials needed to manufacture batteries for electric vehicles. This move is part of Europe’s broader ambition to become an industrial powerhouse in the markets of the future, which are digital and clean technologies. According to the EU’s Commissioner for Internal Market, Thierry Breton, “there will be no green or digital transition without a strong manufacturing base.”
The European Chips Law will ensure that the EU strengthens its semiconductor ecosystem, increases its resilience and reduces its external dependency. Since the plan was announced last year, Europe has attracted more than €100 billion in new public and private investment.
The EU Internal Market Commissioner Thierry Breton says the EU Chip Act will give Europe the chance to take its destiny into its own hands. The Vice-President of the European Commission, Margret Vestager, highlighted that the chip law is necessary to stimulate the digital and green transition of health systems.
