EU Commission: Another 15 billion euros for chip production - Germany is hoping for surcharges

Created: 02/08/2022, 17:10

The EU Commission wants to help the European chip industry, which has fallen behind, with billions of euros.

(Iconic image) © Jenny Kane/AP/dpa

The European chip industry is becoming increasingly dependent on the competition in Asia and the USA.

The EU Commission now wants to change that with a program worth billions.

Brussels/Berlin – The EU Commission wants to help the European chip industry*, which has fallen behind, with billions of euros.

By 2030, the initiative called the "European Chips Act" would mobilize 15 billion euros in additional public and private investment, said EU Commission President Ursula von der Leyen on Tuesday.

Chip shortage reveals strong dependence on Asia and the USA

These funds would be in addition to already planned public investments of 30 billion made available through existing programs.

Car manufacturers and electronics companies in particular are currently suffering from the ongoing shortage of chips.

The delivery bottlenecks are also heating up inflation, which has already risen sharply.

In recent years, Europe has become heavily dependent on manufacturers from Asia and the USA.

At the moment, more than two thirds of all modern semiconductors are manufactured in Asia, only about ten percent of the global supply is manufactured in Europe.

With the help of the "European Chips Act", this proportion is to increase to 20 percent over the next ten years in order to increase Europe's competitiveness and resilience.

However, patience is required: “In a growing market, we have to triple or quadruple production in Europe in order to reach the targeted global market share of 20 percent.

It will take us five to eight years to catch up," Albert Heuberger, head of the Fraunhofer Institute for Integrated Circuits, told Reuters news agency.

Chip offensive: Positive feedback from politics and business

The Federal Ministry of Economics welcomed the project, which is based on the $52 billion US Chips Act.

“In order to become less dependent on global supply chains and to strengthen Europe's technological sovereignty, Europe's share of global chip production must increase significantly.

The European Chips Act can make an important contribution to this,” said the Parliamentary State Secretary in the Ministry of Economics, Franziska Brantner.

The European Commission must set the state aid framework in such a way that all possibilities are exhausted and companies and member states can get started quickly.

It is important for the economy to promote not only small but also larger semiconductors and new material compositions with high innovation potential, said Iris Plöger from the German industry association BDI.

"This year, the Commission and the federal government must make the announced eleven billion euros available for the design and production of chips and address the massive shortage of skilled workers."

The digital association Bitkom emphasized that the European semiconductor value chain must be strengthened from start to finish.

"It starts with research and innovation, extends to the development of design skills to the comprehensive expansion of production and also includes the manufacture of materials and production systems." There must be close cooperation with industry here.

EU softens state aid rules

In concrete terms, the "European Chips Act" provides that it will be made easier for states to support factories that manufacture innovative products.

Financing rules should be relaxed for this.

It will even be possible to close funding gaps with up to 100 percent state aid, said EU Competition Commissioner Margrethe Vestager.

In addition, cooperation with international partners should be facilitated.

The subsidies are intended to attract further private investment.

Chip companies such as Intel, TSMC and GlobalWafers are already looking for locations for chip factories in Europe.

With Dresden, Magdeburg and Penzing in Bavaria, Germany has high hopes for bids.

Intel Germany boss Christin Eisenschmid described the European Chips Act as a catalyst for EU-wide investments by her company.

The US chip company is thinking about increasing its European footprint.

Location decisions are expected to be made in the coming months.

EU member states as well as the EU Parliament* still have to approve the European Chips Act before it becomes law.