European Union plans boost for chip sector

The European Commission will ease funding rules for innovative semiconductor plants under plans announced on Tuesday as the European Union looks to boost its chip industry and cut its dependence on US and Asian supply.

The Commission’s action comes as a global chip shortage and supply chain bottlenecks have created havoc for car makers, healthcare providers, telecoms operators and others.

The European Chips Act will “enable €15 billion ($17 billion) in additional public and private investment by 2030,” Commission President Ursula von der Leyen said in a statement.

“This will come on top of €30 billion of public investments already planned from NextGenerationEU, Horizon Europe and national budgets. And these funds are set to be matched by further long-term private investments,” she said, referring to ongoing EU projects.

The EU move mirrors the $52 billion US Chips Act aimed at increasing competitiveness with China.

Von der Leyen said the bloc will ease its state aid rules, which aim to prevent illegal and unfair subsidies granted by EU countries to companies, for innovative chip factories.

“We are, therefore, adapting our state aid rules, under strict conditions. This will allow - for the first time - public support for European ‘first-of-a-kind’ production facilities, which benefit all of Europe.”

These factories may be allowed to get more state funding, EU digital chief Margrethe Vestager said, as the bloc seeks to double its global market share to 20% in 2030. “Such facilities, they would not exist in Europe if we do not do something. It may be justified to cover up to 100% of the proven funding gap with public resources,” she told a news conference.

Published in The Express Tribune, February 9^th, 2022.

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