EU agrees €43 billion Chips Act to boost semiconductor production

April 23, 2023

The European Council, on behalf of member states, agreed with the European Parliament Tuesday for an act to boost the European Union (EU)'s industry and limit relying on Asian suppliers.

Originally proposed by the European Commission last year to only subsidise producers making cutting-edge chips, funding will now go toward facilities along the entire, including older chips and research and design.

The deal targets raising over €43 billion from public and private sources to fund the subsidies and ultimately sees the bloc quadrupling production to double its share of the semiconductor industry to 20% by 2030.

The Council of the European Union's Swedish presidency stated: "The Chips Act will boost the European ecosystem for semiconductors and play a vital part in strengthening the EU's competitiveness at the global level".

The EU has emphasised domestic production of chips after post-pandemic hiccoughs effected supply chain shortages, as part of a broader effort to reduce its vulnerability to global shocks after the invasion of Ukraine forced member states to wean off Russian gas.

In a statement published after the agreement, internal markets commissioner said: "This will allow us to rebalance and secure our supply chains, reducing our collective dependence on Asia". Asian firms, namely in China and Taiwan, make and export most of the world's chips today.

Tuesday's action follows the United States pledging some US$52 billion last August for manufacturing microchips and tens of billions for additional R&D, and similar production-boosting commitments from Japan and South Korea.