EU outlines €43 billion plan to fix Europe’s chip shortage 

The European Union has outlined an ambitious new industrial policy that aims to make the bloc a significant player in the global semiconductor industry.

The European Chip Act, passed this week by the European Commission, bundles 43 billion euros ($49 billion) in public and private funding for the sector, with the ultimate goal of doubling the EU’s share of the global chip production from 9% to 20%. % by 2030. 

For years, the EU has wanted to increase its leadership in the development and manufacture of semiconductor chips (it unveiled a similar funding plan in 2013), but the global supply chain crisis triggered by the pandemic has heightened the urgency of these plans. 

“You all know that the global shortage of chips has really slowed our recovery,” European Commission President Ursula von der Leyen said when announcing the Chips Act. “We have seen entire production lines stop, for example with cars. As demand increased, we could not deliver as needed due to lack of chips. So this European flea law comes at absolutely the right time.

The EU isn’t the only major economic power to realize the centrality of chips to future economic growth. Countries around the world have been outlining investment plans for the industry, and just last week the House of Representatives approved $52 billion of federal funding for the United States’ own semiconductor industry, with $39 billion of this earmarked for the development of new fabrication plants or fabs. 

In comparison with the US, the EU’s funding looks significantly weaker. Although the top-line figures are similar, the EU’s €43 billion budget includes €30 billion in previously announced investments, while direct funding from the bloc constitutes less than 15 percent of the total. The majority of the money is instead expected to be delivered by member states, whose lawmakers have yet to approve the act. Political wrangling and national concerns may then slow down how the proposed funding reaches projects that need it.