EU agrees Chips Act terms

“By mastering the most advanced semiconductors, the EU will become an industrial power in the markets of the future,” says Commissioner Thierry Breton.

However the only companies which have shown interest in making advanced chips in Europe under the terms of the EU Chips Act have been foreign. None of Europe’s domestic chip companies have any interest in manufacturing the most advanced chips in Europe.

The EU says the measure will lead to Europe winning a 20% world chip market share but the CEO of NXP points out that achieving this would cost more like $500 billion than the $50 billion contemplated by the EU Chips Act.

However, EU Chips Act is looking to do more than just setting up manufacturing facilities. In the EC’s statement it says:

“The first pillar of the Act – the Chips for Europe Initiative – will reinforce Europe’s technological leadership, by facilitating the transfer of knowledge from the lab to the fab, bridging the gap between research and innovation and industrial activities and by promoting the industrialisation of innovative technologies by European businesses.

“The Chips for Europe Initiative will combine investments from the Union, Member States and the private sector, through a strategic reorientation of the Key Digital Technologies Joint Undertaking (renamed ‘Chips Joint Undertaking’). The Initiative will be supported by €6.2 billion of public funds, of which €3.3 billion from the EU budget agreed today for the period until 2027, the end of the current multi-annual financial framework.

“This support will come in addition to €2.6 billion public funding already foreseen for semiconductor technologies. The €6.2 billion will support activities, such as the development of a design platform and setting up of pilot lines to accelerate innovation and production. The Initiative will also help the establishment of competence centres, located across Europe, which will provide access to technical expertise and experimentation, helping companies, SMEs in particular, to improve design capabilities and developing skills. Together with design centres of excellence, they will become poles of attraction for innovation and for new talent. Moreover, to support start-ups and SMEs, access to finance will be ensured through a Chips Fund and a dedicated semiconductor equity investment facility established under InvestEU.

“In addition to the Chips for Europe Initiative, the second pillar of the European Chips Act will incentivise public and private investments in manufacturing facilities for chipmakers and their suppliers. This will contribute to the overall public investments in the sector estimated at €43 billion.

“The second pillar of the European Chips Act will create a framework to ensure security of supply by attracting investments and enhancing production capacities in semiconductor manufacturing. To this end, it sets out a framework for Integrated Production Facilities and Open EU Foundries that are “first-of-a-kind” in the Union and contribute to the security of supply and to a resilient ecosystem in the Union interest

“State aid may be granted to these first-of-a-kind facilities directly under Article 107(3)(c) of the Treaty on the Functioning of the European Union, subject to approval by the Commission as outlined in the Chips Act Communication. In addition, Member States should provide administrative support to these facilities, including fast tracking of administrative application procedures.

“In its third pillar, the European Chips Act will also establish a coordination mechanism between the Member States and the Commission for strengthening collaboration with and across Member States, monitoring the supply of semiconductors, estimating demand, anticipating shortages, and, if necessary, triggering the activation of a crisis stage. To address such situations, the European Chips Act establishes a dedicated toolbox of measures that can be undertaken.”

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