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EU to support autonomy in semiconductors with Chips Act

Written by Tue 28 Sep 2021

In a state of the union speech, EU president Ursula von der Leyen outlined a new act intended to drive the EU’s autonomy, resilience and self-sufficiency by supporting the semiconductor supply chain.

Recently, a semiconductor shortage has impacted a variety of industries that depend on a steady supply of chips for research, design, testing and production. Recently, automakers including Ford, GM and Chrysler were required to stop production on popular models, and the availability of consumer electronics such as video game consoles, appliances, and even iPhones could be impacted as well.

The Chips Act aims to create a chip ecosystem within the EU, joining research, design, and testing; coordinating EU and national investments to reduce dependence on external semiconductor suppliers and reduce vulnerabilities. President von der Leyen pointed out the risk of dependency, noting, “There is no digital without chips. While we speak, whole production lines are already working at reduced speed (despite growing demand) because of a shortage of semiconductors.”

“We depend on state-of-the-art chips manufactured in Asia, so it’s not just a matter of competitiveness: this is also a matter of tech sovereignty. So let’s put all of our focus on it.”

The semiconductor strategy outlined in the Chip Act consists of three separate components: research, production, and partnership. The research piece will build on an existing agreement among EU member states known as the Key Digital Technologies (KDT) Joint Undertaking. The KDT seeks to promote EU digital sovereignty with an initial contribution of €1.8 billion from the commission, and an additional €2.5 billion contributed through industry associations.

The production element will support legislation that directs design, production, packaging, equipment, and actors across the supply chain. Finally, the Chip Act includes a plan for ongoing partnership and cooperation throughout the EU.

Thierry Breton, the internal market commissioner for the EU, elaborated on how important ongoing cooperation between EU member states would be to the semiconductor initiative.

“The idea is not to produce everything on our own here in Europe. In addition to making our local production more resilient, we need to design a strategy to diversify our supply chains in order to decrease over-dependence on a single country or region.”

“And while the EU aims to remain the top global destination of foreign investment and we welcome foreign investment to help increase our production capacity especially in high-end technology, through the European Chips Act we will also put the right conditions in place to preserve Europe’s security of supply.”

Written by Tue 28 Sep 2021

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chips EU Europe semiconductors
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