The European Union has agreed to a landmark plan to boost the chip industry.
The initiative, called the European Chip Law, aims to ensure that the bloc competes with the US and Asia in technology and controls the key technology behind the world’s electronic products and devices.
EU parliament and 27 member states reached agreement on the bill on tuesday. In a statement, they said the new rules aim to double the EU’s global market share in semiconductors from 10% to 20% by 2030.
“This agreement is paramount for the green and digital transition while ensuring the EU’s resilience in turbulent times,” said Swedish Energy Minister Eva Busch.
“The new regulations represent a real revolution for Europe in the key sector of semiconductors.”
What does the tipping law include?
The European Chip Act is a massive €43 billion ($47 billion) public-private investment package aimed at securing supply chains, avoiding future semiconductor shortages and spurring investment in the industry.
The tipping method has three main purposes.
- Building massive capacity and innovation.
- Make sure the EU is self-sufficient.
- Prepare the EU for potential future supply crises.
The EU Chips Act will invest €6.2 billion to facilitate the industrialization of innovative technologies, establish competence centers for skills development and secure access to finance. said in a statement.
It will also encourage investment in manufacturing facilities, provide a framework for integrated production facilities, and open up EU foundries to secure supply.
Member states will also monitor supplies and coordinate to anticipate shortages, the committee said. Since first announcing plans last year, the EU has already amassed public and private commitments for her €90 billion to her €100 billion industrial deployment.
Why is it important?
Chips are effectively the brains of electronic devices. It’s used in everything from smartphones to gaming consoles, but it’s also used in unexpected products like cars and refrigerators.
Semiconductors and the supply chains behind them, primarily based in East Asia, A thorny problem for the world government after global shortages led to supply problems for major automakers and electronics makers.
The Covid-19 pandemic has exposed an over-reliance on manufacturers in Taiwan and China for semiconductor components. That dependency is fraught with rising tensions between China and Taiwan.
Taiwanese semiconductor giant TSMC is the largest producer of microchips. Its chip-manufacturing capabilities are the envy of many developed Western nations, which are taking steps to boost domestic production of chips.
Europe has sought to better manage its supply chains to reduce its reliance on foreign market players. The move is part of the EU’s drive to achieve “digital sovereignty”, which refers to the idea of having more control over vital technologies.
“The swift implementation of today’s deal will transform our dependency into market leadership, our vulnerability into sovereignty, and our spending into investment,” Bush said. “The Chip Act will allow Europe to be at the forefront of cutting-edge technologies that are essential for the green and digital transition.”
I can’t go alone
At the same time, the European Union realized that it could not achieve this production boost alone. No European company can manufacture state-of-the-art chips.
The EU wants to attract funds from foreign companies to the EU market.US semiconductor giant intel is one of the companies increasing investments in Europe, pledging more than €33 billion to boost chip manufacturing across the EU.
In the UK, chip companies are threatening to leave the UK after failing to get similar support from the government.
Europe is home to semiconductor giants — Dutch company ASMLASML’s extreme ultraviolet lithography equipment is used to etch fine features into silicon wafers. But the company doesn’t make its own chips.
Officials want to develop more semiconductors within Europe so as not to face the risk of major shortages or threats to national security.
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