The European Commission, the EU’s executive arm, expects the lack of semiconductors – caused in part by the coronavirus pandemic – to continue for some time, and may agree to allowing governments to subsidise cutting-edge chip plants within Europe.
Semiconductors are a key component in many electronics, such as smartphones and cars. Automakers have been one sector struggling because of the shortage, which has slowed or even halted production.
Currently, Europe mainly depends on Asia for semiconductors, and the EU wants to reduce this by boosting production within the continent.
Margrethe Vestager, EU antitrust chief, said that “the commission will consider approving support to fill funding gaps in the semiconductor ecosystem, in particular for European first-of-a-kind facilities.”
She added that safeguards will be put in place to ensure that the aid is “necessary, appropriate, proportionate and of course to make sure that undue competition distortion is limited.”
However, six member states including Denmark, Ireland, and the Netherlands have sent a letter to the commission to oppose government funding being used for mass production or commercial activities.
The letter argued that “excessive and non-targeted use” of strategic funds for key industries would lead to “subsidy races and unfair competition within the EU.”
The EU will release its European Chips Act in the beginning of 2022, as part of its strategy to increase semiconductor production. One of its aims is to each 20% of global market share by 2030.
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