The US and the EU announced the end of the race for subsidies to stimulate the production of chips, the transition will be announced soon

The United States and the European Union will announce a joint effort to head off a “subsidy race” as they struggle to increase production of scarce semiconductor chips, a senior Biden administration official said.

The move will be presented at the second meeting of the US-EU Trade and Technology Council (TTC) on Sunday and Monday in Paris.

At its inaugural conference last year in Pittsburgh, the TTC pledged to deepen transatlantic cooperation to strengthen chip supply chains, curb China’s off-market trading practices, and take a more unified approach to regulating major global technology companies.

“You will see us announce … a transatlantic approach to semiconductor investment focused on security of supply,” a senior administration official told reporters Friday ahead of the meeting.

Both Washington and Brussels want to encourage chip investment, and “do it in a coordinated way, not just encourage a subsidy race,” the official added.

An ongoing industry-wide shortage of chips has disrupted production in the automotive and electronics industries, forcing some firms to cut production. But a US law that would provide chip makers $52 billion (roughly Rs. 4,03,970 crores) to fund production expansion has stuck in Congress.

The official said an early warning system to detect and fix disruptions in the semiconductor supply chain will also be announced as part of the meeting, which will be chaired by Secretary of State Anthony Blinken, Secretary of Commerce Gina Raimondo and US Trade Representative Catherine Tai.

EU Trade Head Valdis Dombrovskis and EU Antimonopoly Authority Head Margrethe Vestager will also attend, the official said.

The council will also announce a new cooperation scheme that the official said is designed to combat online disinformation, such as Russia’s false claims about its invasion of Ukraine. Moscow calls its actions in Ukraine a “special forces operation.”

© Thomson Reuters 2022