EU Approves $47B Plan to Boost Semiconductor Production and Slash Asia Reliance
European Union member states have given final approval to a monumental plan aimed at expanding semiconductor production within the bloc. The move clears the path for the EU’s massive effort to reduce its reliance on Asia for computer chips, which are crucial components used in everything from washing machines to cars.
The plan, known as the EU’s Chips Act, will allocate a staggering €43 billion ($47 billion) in public and private funds to support the semiconductor industry. The act will also allow state aid to be provided for new chipmaking facilities across the 27-nation bloc. European leaders envision utilizing this investment to spur the construction of cutting-edge manufacturing plants, with the ambitious goal of doubling the EU’s share of global semiconductor production to 20% by 2030.
The decision to ramp up domestic semiconductor capabilities comes as a response to the overwhelming dominance of Asia in this vital industry. The COVID-19 pandemic exposed the vulnerabilities of global supply chains, resulting in significant shortages of automobiles, smartphones, and medical devices due to disruptions in semiconductor production. In an effort to reduce dependence on Asia, not only has the EU implemented the Chips Act, but the United States has also launched its own $52 billion program and the United Kingdom has a comparatively smaller $1.2 billion strategy. Additionally, major companies like Intel have announced ambitious investment plans for expanding their presence in Europe.
Semiconductors, commonly referred to as chips, are integrated circuits embedded in a material, usually silicon, that effectively manages the flow of electric current. By bolstering its domestic semiconductor production, the EU aims to secure its own supply chain and reduce vulnerability to any future disruptions.
The EU Chips Act will become effective once it is published in the Official Journal of the European Union.
In this pursuit of semiconductor self-sufficiency, it is crucial to highlight the continued global cooperation and partnerships that exist within the industry. While Europe is committed to enhancing its own semiconductor production capabilities, it recognizes the importance of collaboration on a global scale. As such, the EU remains open to working with international partners to foster innovation, research, and development and ensure a stable and resilient supply of critical semiconductor components.
The approval of the Chips Act is a significant milestone in the EU’s efforts to bolster its technological sovereignty and reduce dependence on Asia. With substantial investment and support, Europe is poised to make substantial progress towards achieving its ambitious goal of doubling its share of global semiconductor production. Furthermore, by enhancing its capabilities in this critical sector, the EU aims to contribute to the resilience and security of global supply chains, ensuring a stable and technologically advanced future for industries reliant on semiconductors.
