EU proposes $43 billion microchip investment programme

The EU announced on Tuesday a €43 billion ($49 billion) plan to become a major chip producer, to ease dependency on Asian manufacturers of the components, Kallanish notes.

“Chips are at the centre of the global technological race,” says European Commission (EC) President Ursula von der Leyen. “The Covid-19 pandemic has painfully exposed the vulnerability of its supply chains. While demand was increasing, we could not deliver as needed because of the lack of semiconductors.”

The new Europe Chips Act will link research and coordinate EU and national investment. The plan will combine public and private funds to allow for state aid to provide for massive investments to boost chip production.

The EC aims to more than double the EU’s global market share in semiconductor production to 20% by 2030. Now, European nations only have 9% of the global market share of semiconductors.

To this end, the EC is providing subsidies of €11 billion for research in the field of chips, which will come from EU funding instruments as well as member states’ finances. The EU hopes to secure the remainder of funding from private investments.

The funds are also intended to encourage investment by foreign companies. American chipmaker Intel, for example, has announced its intention to invest in Europe.

The proposed regulation will now be discussed by the European Parliament and the Council. The Commission will assist the co-legislators to reach an agreement as soon as possible.

German carmaker Volkswagen Group expects the short-term supply of semiconductors to the automotive industry to continue to be very volatile and strained, the company tells Kallanish.

“At least the first half of 2022 will remain very volatile and challenging due to ongoing supply bottlenecks,” the enterprise claims. “However, there will probably only be a real upward trend in 2023, when the capacities that the semiconductor manufacturers are now building arrive on the market. It should then be possible to make more reliable predictions.”

In 2021, global production of 9.5 million vehicles was delayed due to a lack of chips, the European Association of Automotive Suppliers (CLEPA) said last week. Although this year could show a modest recovery in global light vehicle production, supplier and market estimates still forecast, on average, production losses of 4-6m vehicles, CLEPA claims.

Svetoslav Abrossimov Bulgaria