EU plans ‘Chips Act’ to promote self-sufficiency in semiconductors

The European Commission announced on Wednesday plans to create a new “ecosystem” for chip manufacturing to keep the EU competitive and self-sufficient after a global semiconductor shortage showed the danger of relying on suppliers from Asia and the US.

“Digital is a critical issue,” Commission President Ursula von der Leyen said in a political speech at the European Parliament in Strasbourg on Wednesday.

“We will introduce a new Law on European Chips. The goal is to jointly create a modern European chip ecosystem, including manufacturing. This will ensure the security of our supply and lead to the development of new markets for innovative European technologies. ”

Semiconductor shortages pose one of the biggest risks to the EU’s recovery from the effects of the COVID-19 pandemic. Last year, the Commission unveiled plans to invest a fifth of its COVID-19 recovery fund of 750 billion euros (roughly Rs 65.17,465) in digital projects.

Von der Leyen lamented the EU’s dependence on Asian-made microcircuits and its shrinking share in the supply chain, from design to manufacturing capacity.

However, obstacles to building up Europe’s chip-making capacity include gaining access to rare earth minerals outside of the block and companies reluctant to make huge investments unless they can run factories at full capacity to maximize their returns.

© Thomson Reuters 2021