On 21 September 2023, the European Chips Act entered into force, which is part of a wider package that also includes a Communication outlining the rationale and global semiconductor strategy, amending a Council Regulation establishing the KDT Joint Undertaking, and a Recommendation to Member States to promote actions for the immediate monitoring and mitigation of disruptions in the semiconductor supply chain. This law seeks to strengthen Europe's competitiveness and resilience in the strategic semiconductor sector.
Semiconductors are essential components in digital and digitized products, from smartphones to automobiles to critical applications and infrastructure in areas such as healthcare, energy, communications, and industrial automation.
With the recent global semiconductor shortage, it has become clear that the semiconductor value chain is extremely dependent on a very limited number of third-party suppliers, such as Taiwan and Southeast Asia for manufacturing, and the U.S. for design. Therefore, the European Chip Strategy aims to jointly create a European chip ecosystem, including production and connecting research, design and testing capabilities.
The European Chips Act aims to:
Strengthening Europe's technological and research leadership: moving towards the production of smaller, faster chips
Establish a framework to increase production capacity to 20% of the global market by 2030
Develop and strengthen innovation capacity in the design, manufacture and packaging of advanced chips
Develop an in-depth understanding of global semiconductor supply chains
Address skills shortages, attract new talent, and foster the generation of a skilled workforce.
The European Chips Act will mobilise more than €43 billion of public and private investments and put in place measures to prepare for, anticipate and respond quickly to any future supply chain disruptions.
This will be done on the basis of three pillars of action:
The Chips for Europe initiative: which will support the development of technological capabilities and large-scale innovation, by bridging the gap between the EU's advanced research and innovation capabilities and their industrial exploitation.
Security of supply and resilience: A framework is established to ensure the security of supply and resilience of the EU semiconductor sector by attracting investment and improving production capacities in manufacturing, advanced packaging, testing and assembly.
Crisis monitoring and response: through the establishment of the European Semiconductor Council, which is a coordination mechanism between Member States and the Commission to strengthen collaboration on crisis monitoring and response.