EU Chips Act: Promising ambition, but more clarity needed on how money will be sourced

Today, the European Commission published the EU Chips Act proposal. DIGITALEUROPE believes that this initiative can bring back semiconductor leadership in Europe, if we get it right.

In short, DIGITALEUROPE is pleased with the following aspects in the Act:

• The focus has been put on building competences, including on chip design, to meet current and future market needs.

• The measures aimed at building new fabs and easing the cumbersome construction permit processes are also an important step for Europe to expand capacity.

However, our main reservations are:

• On monitoring, reporting obligations should be kept to a minimum. We caution against excessively broad reporting obligations that add administrative burden on companies and create risks of duplication.

• It is still unclear how much indirect funding (money coming from member states) will be secured, and how it will be spent. More clarity on the size and source of funding especially for research and development is needed.

DIGITALEUROPE’s Director-General Cecilia Bonefeld-Dahl said: 

“The EU attracted just 3% of global investment for chip factories in 2020 and a lot of work is needed to push this figure upwards. To achieve the target of 20% of global chip production by 2030, bolder efforts need to be made. The European Chips Act is a step in the right direction, but we should never neglect how crucial international collaboration is. It is essential that we align closely with like-minded countries – for example, through the EU-US Trade and Technology Council – to promote a geopolitically balanced production and promote transatlantic innovation partnerships.”

DIGITALEUROPE speaks on behalf of the digitally transforming industries in Europe, representing 130 members and over 35,000 businesses. We look forward to cooperating with Member States and the European Parliament to ensure this package of measures translates into concrete policy and investment measures for the benefit of European citizens and businesses.

The road to Europe’s industrial leadership is paved with chips

• Artificial intelligence, autonomous driving, edge computing, 5G and 6G networks rely on high-performance processors in small structure sizes.

• Chips in mature structure size will also continue to be in demand.

• Semiconductors will grow from 4% today to 20% of a vehicle cost by 2030. Two-thirds of medtech companies have chips in more than half of their products.

• Semiconductors are a deeply global business, being the world’s fourth most traded product. A chip travels the world 2.5 times before reaching the customer in the right quality. Building a fully autonomous chip supply chain in Europe is not the solution. It would cost about 1 trillion euro, more than the size of the NextGenerationEU instrument.