European Chips Act to reduce Europe’s reliance on Non-EU chip suppliers

The European Parliament and the EU member states have reached a political agreement on the European Chips Act proposed by the European Commission on 8 February 2022. The Act aims to support European competitiveness and resilience in the strategic sector of semiconductors, which are essential building blocks of digital products.

The recent semiconductor shortages have highlighted Europe’s dependency on a limited number of suppliers outside of the EU. The Act will strengthen manufacturing activities, stimulate the European design ecosystem, and support innovation across the value chain, with the goal of doubling the EU’s current global market share to 20% by 2030.

The Act has three pillars: the Chips for Europe Initiative to strengthen Europe’s position as a technological leader, incentivising public and private investments in manufacturing facilities, and establishing a coordination mechanism between member states and the Commission. The Chips for Europe Initiative will be supported by €6.2 billion of public funds, of which €3.3 billion will come from the EU budget agreed upon for the period until 2027. The Act aims to ensure the security of supply and contribute to a resilient ecosystem in the EU’s interest. The agreement is subject to formal approval by the co-legislators.