EU Propose Chips Act to Boost Global Semiconductor Status

Last week, EU parliamentarians presented the European Chips Act (ECA), which aims to enhance semiconductor industry output and overall manufacturing competence. While each member state has its own plan, strategic unification is one of the ECA’s main objectives.

Consolidated supply chains, expanded fabrication, and incentives, lawmakers hope, will mitigate present issues. This is particularly true on a regional and even country-by-country level.

In contrast, the CHIPS for America Act, which was inspired in part by the EU’s effort for its own chips act, gathered traction late this year and aims to strengthen the United States’ domestic manufacturing capabilities. Many are looking at Arizona as the next “silicon desert,” with TSMC and a number of other foundries joining the quest to increase chip manufacture in the United States.

Europe is more than ever suffering the effects of semiconductor scarcity. Because the EU controls only 10% of the global semiconductor market, it has had to rely on American or Asian suppliers to meet its needs.

The global supply chain has mostly excluded European companies. China dominates silicon production, while the majority of rare-earth mineral reserves are found outside of the European Union. As a result, Europe has struggled to establish itself. That is why, despite any competitive breakthroughs, it is critical for the EU to retain solid trade partnerships. The importance of material sourcing cannot be overstated.

As a result, the legislative framework aims to prevent fragmentation and muddy the waters with piecemeal national subsidies. During her State of the Union address, European Commission President Ursula von der Leyen explained the idea. Thierry Breton, the European Commissioner for the Internal Market, believes the ECA will ensure Europe’s technological sovereignty.

It’s no coincidence that these discussions are taking place right now. Europe has also been affected by the chip shortage, with vehicles and “computer, electronic, and optical products” ranking two of the top five exports in 2020. Fortunately, help may be on the way. The European Commission intends to set aside roughly €150 billion for digital initiatives from its COVID relief fund.

In addition, Intel intends to invest $95 billion in the production of car chips in Ireland. The plan is to establish at least two new European production sites over the next decade, with investment increasing. Intel believes that assisting automakers requires ramping up manufacturing and devoting existing capacity. According to Taiwanese officials, TSMC is unlikely to develop a facility in the EU.

The EU is also considering establishing a major semiconductor alliance in addition to the European Chips Act. STMicroelectronics, Infineon, NXP, and ASML are among the companies in this group, all of which are based in Europe. GlobalFoundries has also expressed its support for the project. The talks are just getting started, but they might span the entire continent. The agreement would be classified as an Important Project of Common European Interest, allowing corporations to collaborate while easing financial constraints.

By avoiding reliance on foreign suppliers, the EU hopes to grab 20% of the global semiconductor industry by 2030, more than doubling its current share.

Another premise of the European Chips Act is that Europe’s role as a chipmaking power cannot be realized without research and development. It may be able to avoid—or at least mitigate—future difficulties by improving chipset designs and fabrication pipelines.

Legislators want Europe to become a tech haven in addition to recovering from the existing shortfall. Without new personnel, new plants cannot function successfully. Furthermore, technical leaps from one SoC to the next will necessitate a significant amount of R&D. It’s feasible that the EU’s initiatives may result in a surge of new jobs. At the absolute least, it will confirm the value of experienced EEs and fab professionals.

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