EU proposes public subsidies to boost microchips production

BRUSSELS

The European Commission proposed on Tuesday a new act enabling public subsidies to make the EU a global leader in microchips production.

“In the European Chips Act, we are combining investment regulatory framework and the necessary strategic partnerships to make Europe a leader in this market that is so important,” Ursula von der Leyen, the president of the European Commission, told reporters.

Calling the market of semiconductors “the bedrock of our modern economies,” von der Leyen explained that the EU wants to tackle the vulnerability of supply chains that slowed down the recovery after the COVID-19 pandemic.

The EU’s goal is “to make Europe an industrial leader in this very strategic market” and to increase the current market share from 9% to 20% by 2030, she stressed.

With the new draft, European Commission suggests making an exception under the bloc’s strict state aid rules and authorizing public support to create new production facilities in the EU territory.

The EU executive body also proposes support for small, innovative startups and the education of employees. The bloc will also build partnerships with “like-minded partners” such as Japan and the US to “balance interdependencies” and to improve the reliability of supply, von der Leyen added.

According to the EU’s estimations, the European Chips Act will mobilize an additional €43 billion ($49 billion) in public and private investment by 2030. A microchip is a set of electric circuits, used to manufacture all modern devices, including mobile phones, washing machines, MRI scanners, or spacecraft. In 2020, over 932 billion microchips were produced across the world. The EU currently manufactures 9% of the world output, while the majority of semiconductors are made in Asia.