EU launches €43 billion plan to combat chip shortage

The semiconductor chip shortage has led to increased prices for electronics goods, delayed delivery for consumer electronics and medical appliances, and a drop in car production by up to a third in some EU countries.

In its statement, the EU noted that it only has roughly 10% of the global market share and is heavily dependent on third-country suppliers. Its ambition is to reach at least 20% of world production in value of semiconductors by 2030.

The ‘European Chips Act’ aims to strengthen its own semiconductors ecosystem and become less reliant on the Asian chip market.

“In the short term, it will increase our resilience to future crises, by enabling us to anticipate and avoid supply chain disruptions. And in the mid-term, it will help make Europe an industrial leader in the strategic branch. With the European Chips Act, we are putting out the investments and the strategy,” said European Commission president Ursula von der Leyen.

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The strategic objectives of the plan include investment into next-generation technologies, a more investor-friendly framework, support for start-ups, scale-ups and SMEs, training new talent in microelectronics, and building semiconductor international partnerships with other countries (such as the US, Japan, South Korea, and Taiwan.)

Currently, Taiwan is the world’s largest producer of chips, accounting for around 60% of global output.

The US similarly makes only 10% of the world’s semiconductors and President Joe Biden is also pushing to invest into the national chip-producing sector with $52 billion.

“Our aim is to jointly create a state-of-the-art European chip ecosystem, including production. We need to link together our world-class research, design and testing capacities. We need to coordinate EU and national investment along the value chain. This is not just a matter of our competitiveness. This is also a matter of tech sovereignty,” added Ursula von der Leyen.

The plan is waiting to receive backing from the EU parliament and the member states.

Earlier this week, Nvidia scrapped plans to acquire UK-based chip designer Arm from SoftBank due to “significant regulatory challenges” as set by the EU.