Negotiating teams from the European Parliament, the Swedish Council presidency, and the Commission agreed on the Chips Act, a range of measures meant to bring the EU’s share of the global semiconductor value chain to 20 percent by 2030 (it currently stands at 9 percent). The package entails loosening rules to allow more government subsidies for advanced chip facilities, an EU microchips research and development (R&D) budget and tools to monitor potential supply shortages.
The deal, which was struck weeks earlier than expected, paves the way for a subsidy splurge that should enable the bloc to catch up with other major chips hubs like the United States, South Korea, Taiwan and China. The plan was pulled together in the wake of coronavirus-era shortages, but over the past year, tensions between China and Taiwan have underlined the importance of rethinking supply chains.
“This will allow us to rebalance and secure our [chips] supply chains, reducing our collective dependence on Asia,” Internal Market Commissioner Thierry Breton said in a statement shared with POLITICO after concluding the deal.
Chips producers like Intel, STMicroelectronics and GlobalFoundries have already committed to building multibillion-euro facilities in Germany and France, and will seek approval for national subsidies under the new state aid rules. Taiwan-based TSMC — world-leading in producing more advanced chips — is reportedly considering an investment in Europe but hasn’t officially decided yet.
National subsidies, to be approved under the new (relaxed) state aid rules, will take up the majority of the headline figure of €43 billion in investments.
For Intel’s plant in the German state of Sachsen-Anhalt, an investment of €17 billion, talks are still ongoing about the specifics of the support package. Reports have suggested that Intel is seeking more subsidies than an initial €6.8 billion.
One of the last open points during the negotiations between Parliament, member countries and the Commission was the EU’s own R&D budget of €3.3 billion. EU countries were unhappy about taking that budget from existing research funds. EU lawmakers were adamant about keeping the budget at €3.3 billion — which eventually was the case, one Parliament official confirmed.
Ever since the Commission presented the Chips Act, other blocs have moved ahead with their own subsidy packages — the U.S. has its CHIPS and Science Act, with a headline figure of $52 billion and work already started on production facilities by Intel in Ohio and TSMC in Arizona.